Exhibit 99.2
Unaudited Pro Forma Condensed Combined Financial INFORMATION
The following unaudited pro forma condensed combined financial information and notes thereto present the unaudited pro forma condensed combined balance sheet as of September 30, 2021 and the unaudited pro forma condensed combined statements of operations for the nine months ended September 30, 2021 and the year ended December 31, 2020. The unaudited pro forma condensed combined financial information (“pro formas”) was prepared in accordance with Article 11 of Regulation S-X as amended by the final rule, Release No. 33-10786 “Amendments to Financial Disclosures about Acquired and Disposed Businesses”, in order to give effect to the Acquisition (as defined and described below) and the assumptions and adjustments described in the accompanying notes to the unaudited pro forma condensed combined financial information. All amounts herein are denominated in U.S. dollars unless indicated otherwise.
On September 13, 2021, Spire Global, Inc. (“Spire”) and exactEarth Ltd. (“exactEarth”) each entered into an Arrangement Agreement (“Agreement”) for Spire to acquire exactEarth for a combination of cash and Spire stock (“Acquisition”). The Acquisition was consummated on November 30, 2021 (“Acquisition Date”). All deferred stock unit (“DSUs”) awards of exactEarth were settled for $4.1 million following the consummation of the Acquisition with cash from the purchase consideration. Immediately prior to the consummation of the Acquisition, all other outstanding equity awards of exactEarth were converted to outstanding shares of common stock of exactEarth, as described further in Note 3 to the following unaudited pro forma condensed combined financial information and notes thereto. In connection with the Acquisition, each outstanding share of exactEarth common stock was exchanged for 0.1 shares of Spire common stock and $1.95505 in cash. Holders of exactEarth common stock received cash in lieu of fractional shares. As a result of the Acquisition, former exactEarth common stockholders, restricted share unit (“RSU”) holders and stock option holders, together, received $102.3 million in cash and 5,230,167 in shares of Spire common stock. The total consideration for the Acquisition was $131.9 million, comprised of (i) $109.6 million in cash and (ii) 5,230,167 in shares of Spire common stock valued at $22.3 million based on the closing trading price of Spire common stock as of the Acquisition Date. Of the $109.6 million paid in cash, $3.3 million related to acquisition fees of exactEarth paid by Spire upon the closing of the Acquisition. Of the $131.9 million total consideration for the Acquisition, $129.0 million was allocated to the net assets acquired and $2.9 million was treated as post-combination expense as described further in Note 3 to the following unaudited pro forma condensed combined financial information and notes thereto.
The unaudited pro formas are based on the following as adjusted to give effect to the Acquisition:
The unaudited pro forma condensed combined statements of operations (“pro forma statements of operations”) for the nine months ended September 30, 2021 (“2021 pro forma statement of operations”) and for the year ended December 31, 2020 (“2020 pro forma statement of operations”) give effect to the Acquisition as if it occurred on January 1, 2020. Due to differences in each reporting entity’s fiscal year end, the 2021 pro forma statement of operations includes the nine months ended September 30, 2021 for Spire and the nine months ended July 31, 2021 for exactEarth. The 2020 pro forma statement of operations includes the year ended December 31, 2020 for Spire combined with the year ended October 31, 2020 for exactEarth. The unaudited pro forma condensed combined balance sheet (“pro forma balance
sheet”) gives effect to the Acquisition as if it occurred on September 30, 2021, the most recent published balance sheet of Spire and includes pro forma adjustments to exactEarth’s balance sheet as of July 31, 2021. The unaudited pro forma condensed combined financial information has been adjusted to include Acquisition adjustments, which reflect the application of the accounting required by generally accepted accounting principles in the United States (“U.S. GAAP”), applying the effects of the Acquisition to Spire’s historical consolidated financial statements. Certain non-recurring charges have been and may continue to be incurred in connection with the Acquisition, including among others, financial advisors, legal services and professional accounting services. These charges could affect the future results of Spire in the period in which such charges are incurred; however, these costs are not expected to be incurred in any period beyond 12 months from the Acquisition Date. Accordingly, the pro forma statement of operations for the year ended December 31, 2020 reflects the effects of these non-recurring transaction charges as the pro forma statement of operations has been prepared giving effect to the Acquisition as if it had been consummated on January 1, 2020. The pro forma statements of operations exclude any estimated impact of non-recurring integration costs or benefits from the Acquisition, including potential synergies that may be derived in future periods.
The allocation of the purchase price reflected in this unaudited pro forma condensed combined financial information has not been finalized mainly due to the period of time between the Acquisition Date and the date of this filing, and is based upon the best available information at the current time. A final determination of the fair values of the assets and liabilities will be based on the actual valuations of the tangible and intangible assets and liabilities that existed as of the date of the Acquisition. The completion of the final valuations, the allocation of the purchase price and the impact of ongoing integration activities could cause material differences in the information presented. For the preliminary estimate of fair values of assets acquired and liabilities assumed, Spire used customary valuation methods, including the income, market and cost approaches.
The estimated pro forma adjustments to record assets acquired and liabilities assumed at their fair values are preliminary. The final allocation of the purchase price will be determined at a later date and is dependent upon certain valuation and other studies that have not yet been finalized. The final determination will be completed as soon as practicable, but no later than one year after the consummation of the Acquisition. The final valuation of assets acquired and liabilities assumed may be materially different than the estimated values assumed in the unaudited pro forma condensed combined financial information. In particular, the final fair values of property and equipment, intangible assets, loans payable, and investments may be materially different than the estimated values assumed in the unaudited pro forma condensed combined financial information, which may result in material differences in goodwill and depreciation and amortization.
The Acquisition and the related adjustments are described in the accompanying notes to the unaudited pro forma condensed combined financial information. In the opinion of Spire’s management, all material adjustments have been made that are necessary to present fairly, in accordance with Article 11 of Regulation S-X of the SEC, the unaudited pro forma condensed combined financial information. The unaudited pro forma condensed combined financial information does not purport to be indicative of the combined company’s financial position or results of operations of the combined company that would have occurred if the Acquisition had been completed on the dates indicated, nor are they indicative of the combined company’s financial position or results of operations that may be expected for any future period or date.
Spire Global, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Nine Months Ended September 30, 2021
|
|
|
|
|
|
|
Transaction Accounting Adjustments |
|
|
|
|
||||||||||||
($ in thousands, except share and per share amounts) |
Spire Historical for the Nine Months Ended September 30, 2021 |
|
|
exactEarth for the Nine Months Ended July 31, 2021 |
|
|
Acquisition |
|
|
Note 3 |
|
Accounting Policy & Reclassification Adjustments |
|
|
Note 4 |
|
Total Pro Forma Combined |
|
|||||
Revenue |
$ |
28,390 |
|
|
$ |
13,717 |
|
|
$ |
- |
|
|
|
|
$ |
- |
|
|
|
|
$ |
42,107 |
|
Cost of revenue |
|
12,393 |
|
|
|
7,448 |
|
|
|
5,074 |
|
|
e |
|
|
- |
|
|
|
|
|
24,915 |
|
Gross profit |
|
15,997 |
|
|
|
6,269 |
|
|
|
(5,074 |
) |
|
|
|
|
- |
|
|
|
|
|
17,192 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Research and development |
|
21,913 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
621 |
|
|
a |
|
|
22,534 |
|
Sales and marketing |
|
14,369 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
506 |
|
|
b |
|
|
14,875 |
|
General and administrative |
|
23,507 |
|
|
|
- |
|
|
|
138 |
|
|
e |
|
|
5,698 |
|
|
b |
|
|
29,343 |
|
Selling, general and administrative |
|
- |
|
|
|
6,204 |
|
|
|
- |
|
|
|
|
|
(6,204 |
) |
|
b |
|
|
- |
|
Product development and research |
|
- |
|
|
|
621 |
|
|
|
- |
|
|
|
|
|
(621 |
) |
|
a |
|
|
- |
|
Depreciation and amortization |
|
- |
|
|
|
259 |
|
|
|
(259 |
) |
|
e |
|
|
- |
|
|
|
|
|
- |
|
Total operating expenses |
|
59,789 |
|
|
|
7,084 |
|
|
|
(121 |
) |
|
|
|
|
- |
|
|
|
|
|
66,752 |
|
Income (loss) from operations |
|
(43,792 |
) |
|
|
(815 |
) |
|
|
(4,953 |
) |
|
|
|
|
- |
|
|
|
|
|
(49,560 |
) |
Other income (expense) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest income |
|
6 |
|
|
|
34 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
40 |
|
Interest expense |
|
(8,267 |
) |
|
|
(287 |
) |
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
(8,554 |
) |
Change in warrant liability fair value |
|
(23,529 |
) |
|
|
- |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
(23,529 |
) |
Foreign exchange (loss) gain |
|
- |
|
|
|
(403 |
) |
|
|
- |
|
|
|
|
|
403 |
|
|
d |
|
|
- |
|
Other income (expense) |
|
(2,710 |
) |
|
|
(29 |
) |
|
|
(665 |
) |
|
l |
|
|
(403 |
) |
|
d |
|
|
(3,807 |
) |
Total other income (expense) |
|
(34,500 |
) |
|
|
(685 |
) |
|
|
(665 |
) |
|
|
|
|
- |
|
|
|
|
|
(35,850 |
) |
Income (loss) before income taxes |
|
(78,292 |
) |
|
|
(1,500 |
) |
|
|
(5,618 |
) |
|
|
|
|
- |
|
|
|
|
|
(85,410 |
) |
Income tax (benefit) provision |
|
969 |
|
|
|
87 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
1,056 |
|
Net loss |
$ |
(79,261 |
) |
|
$ |
(1,587 |
) |
|
$ |
(5,618 |
) |
|
|
|
$ |
- |
|
|
|
|
$ |
(86,466 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Weighted average shares outstanding |
|
37,389,424 |
|
|
|
|
|
|
5,230,167 |
|
|
h |
|
|
|
|
|
|
|
42,619,591 |
|
||
Basic and diluted net loss per share |
$ |
(2.12 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(2.03 |
) |
|||
See Notes to Unaudited Pro Forma Condensed Combined Financial Information
Spire Global, Inc.
Unaudited Pro Forma Condensed Combined Statement of Operations
For the Year Ended December 31, 2020
|
|
|
|
|
|
|
Transaction Accounting Adjustments |
|
|
|
|
||||||||||||
($ in thousands, except share and per share amounts) |
Spire Historical for the Year Ended December 31, 2020 |
|
|
exactEarth for the Year Ended October 31, 2020 |
|
|
Acquisition |
|
|
Note 3 |
|
Accounting Policy & Reclassification Adjustments |
|
|
Note 4 |
|
Total Pro Forma Combined |
|
|||||
Revenue |
$ |
28,490 |
|
|
$ |
15,211 |
|
|
$ |
(911 |
) |
|
i |
|
$ |
- |
|
|
|
|
$ |
42,790 |
|
Cost of revenue |
|
10,285 |
|
|
|
9,949 |
|
|
|
315 |
|
|
d |
|
|
702 |
|
|
e |
|
|
28,262 |
|
|
|
|
|
|
|
|
|
6,766 |
|
|
e |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
245 |
|
|
f |
|
|
|
|
|
|
|
|
||||
Gross profit |
|
18,205 |
|
|
|
5,262 |
|
|
|
(8,237 |
) |
|
|
|
|
(702 |
) |
|
|
|
|
14,528 |
|
Operating expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Research and development |
|
20,751 |
|
|
|
- |
|
|
|
347 |
|
|
d |
|
|
711 |
|
|
a |
|
|
22,127 |
|
|
|
|
|
|
|
|
|
318 |
|
|
f |
|
|
|
|
|
|
|
|
||||
Sales and marketing |
|
10,279 |
|
|
|
- |
|
|
|
601 |
|
|
d |
|
|
1,089 |
|
|
c |
|
|
15,457 |
|
|
|
|
|
|
|
|
|
3,246 |
|
|
e |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
242 |
|
|
f |
|
|
|
|
|
|
|
|
||||
General and administrative |
|
12,520 |
|
|
|
- |
|
|
|
1,839 |
|
|
d |
|
|
5,862 |
|
|
c |
|
|
27,381 |
|
|
|
|
|
|
|
|
|
184 |
|
|
e |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
733 |
|
|
f |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
6,243 |
|
|
k |
|
|
|
|
|
|
|
|
||||
Loss on satellite deorbit and launch |
|
666 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
666 |
|
Selling, general and administrative |
|
- |
|
|
|
6,951 |
|
|
|
- |
|
|
|
|
|
(6,951 |
) |
|
c |
|
|
- |
|
Product development and research |
|
- |
|
|
|
711 |
|
|
|
- |
|
|
|
|
|
(711 |
) |
|
a |
|
|
- |
|
Depreciation and amortization |
|
- |
|
|
|
461 |
|
|
|
(461 |
) |
|
e |
|
|
- |
|
|
|
|
|
- |
|
Loss on disposal and impairment |
|
- |
|
|
|
702 |
|
|
|
- |
|
|
|
|
|
(702 |
) |
|
e |
|
|
- |
|
Total operating expenses |
|
44,216 |
|
|
|
8,825 |
|
|
|
13,292 |
|
|
|
|
|
(702 |
) |
|
|
|
|
65,631 |
|
Loss from operations |
|
(26,011 |
) |
|
|
(3,563 |
) |
|
|
(21,529 |
) |
|
|
|
|
- |
|
|
|
|
|
(51,103 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Interest income |
|
54 |
|
|
|
65 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
119 |
|
Interest expense |
|
(6,773 |
) |
|
|
(984 |
) |
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
(7,757 |
) |
Foreign exchange (loss) gain |
|
- |
|
|
|
138 |
|
|
|
- |
|
|
|
|
|
(138 |
) |
|
d |
|
|
- |
|
Share of equity investment loss |
|
- |
|
|
|
(358 |
) |
|
|
- |
|
|
|
|
|
358 |
|
|
f |
|
|
- |
|
Other income (expense), net |
|
626 |
|
|
|
- |
|
|
|
(359 |
) |
|
l |
|
|
138 |
|
|
d |
|
|
47 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(358 |
) |
|
f |
|
|
|
||||
Total other income (expense), net |
|
(6,093 |
) |
|
|
(1,139 |
) |
|
|
(359 |
) |
|
|
|
|
- |
|
|
|
|
|
(7,591 |
) |
Loss before income taxes |
|
(32,104 |
) |
|
|
(4,702 |
) |
|
|
(21,888 |
) |
|
|
|
|
- |
|
|
|
|
|
(58,694 |
) |
Income tax (benefit) provision |
|
400 |
|
|
|
118 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
518 |
|
Net loss |
$ |
(32,504 |
) |
|
$ |
(4,820 |
) |
|
$ |
(21,888 |
) |
|
|
|
$ |
- |
|
|
|
|
$ |
(59,212 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Weighted average shares outstanding of Class A |
|
10,323,839 |
|
|
|
|
|
|
5,230,167 |
|
|
h |
|
|
|
|
|
|
|
15,554,006 |
|
||
Basic and diluted net loss per share (Class A |
$ |
(3.15 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(3.81 |
) |
|||
See Notes to Unaudited Pro Forma Condensed Combined Financial Information
Spire Global, Inc.
Unaudited Pro Forma Condensed Combined Balance Sheet
As of September 30, 2021
|
|
|
|
|
|
|
|
Transaction Accounting Adjustments |
|
|
|
|
||||||||||||
($ in thousands) |
|
Spire Historical as of September 30, 2021 |
|
|
exactEarth as of July 31, 2021 |
|
|
Acquisition |
|
|
Note 3 |
|
Accounting Policy & Reclassification Adjustments |
|
|
Note 4 |
|
Total Pro Forma Combined |
|
|||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Cash and cash equivalents |
|
$ |
245,770 |
|
|
$ |
5,646 |
|
|
$ |
(109,592 |
) |
|
a |
|
$ |
- |
|
|
|
|
$ |
141,824 |
|
Accounts receivable, net |
|
|
6,456 |
|
|
|
2,101 |
|
|
|
4,079 |
|
|
j |
|
|
- |
|
|
|
|
|
12,636 |
|
Contract assets |
|
|
1,089 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
1,241 |
|
|
g |
|
|
2,330 |
|
Unbilled revenue |
|
|
- |
|
|
|
1,241 |
|
|
|
- |
|
|
|
|
|
(1,241 |
) |
|
g |
|
|
- |
|
Restricted cash, current |
|
|
12,801 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
12,801 |
|
Prepaid expenses |
|
|
- |
|
|
|
1,214 |
|
|
|
- |
|
|
|
|
|
(1,214 |
) |
|
k |
|
|
- |
|
Other current assets |
|
|
- |
|
|
|
264 |
|
|
|
- |
|
|
|
|
|
(264 |
) |
|
k |
|
|
- |
|
Prepaid expenses and other |
|
|
10,227 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
1,478 |
|
|
k |
|
|
11,705 |
|
Total current assets |
|
|
276,343 |
|
|
|
10,466 |
|
|
|
(105,513 |
) |
|
|
|
|
- |
|
|
|
|
|
181,296 |
|
Property and equipment, net |
|
|
25,855 |
|
|
|
4,475 |
|
|
|
15,625 |
|
|
c |
|
|
- |
|
|
|
|
|
45,955 |
|
Customer relationships |
|
|
- |
|
|
|
- |
|
|
|
24,399 |
|
|
b |
|
|
- |
|
|
|
|
|
24,399 |
|
Intangible assets, net |
|
|
- |
|
|
|
176 |
|
|
|
19,286 |
|
|
b |
|
|
- |
|
|
|
|
|
19,462 |
|
Investment |
|
|
- |
|
|
|
- |
|
|
|
4,159 |
|
|
l |
|
|
- |
|
|
|
|
|
4,159 |
|
Goodwill |
|
|
- |
|
|
|
- |
|
|
|
54,162 |
|
|
a |
|
|
- |
|
|
|
|
|
54,162 |
|
Other long-term assets |
|
|
1,365 |
|
|
|
6,953 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
8,318 |
|
Total assets |
|
$ |
303,563 |
|
|
$ |
22,070 |
|
|
$ |
12,118 |
|
|
|
|
$ |
- |
|
|
|
|
$ |
337,751 |
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Accounts payable |
|
$ |
4,738 |
|
|
$ |
- |
|
|
$ |
1,282 |
|
|
k |
|
$ |
273 |
|
|
l |
|
$ |
6,967 |
|
|
|
|
|
|
|
|
|
|
674 |
|
|
k |
|
|
|
|
|
|
|
|
||||
Accounts payable and accrued |
|
|
- |
|
|
|
4,188 |
|
|
|
- |
|
|
|
|
|
(1,996 |
) |
|
h |
|
|
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(273 |
) |
|
l |
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,919 |
) |
|
m |
|
|
|
||||
Accrued wages and benefits |
|
|
1,865 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
1,996 |
|
|
h |
|
|
3,861 |
|
Contract liabilities, current |
|
|
10,331 |
|
|
|
- |
|
|
|
(911 |
) |
|
i |
|
|
2,153 |
|
|
i |
|
|
11,573 |
|
Warrant liability, current portion |
|
|
22,582 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
22,582 |
|
Deferred revenue |
|
|
- |
|
|
|
2,153 |
|
|
|
- |
|
|
|
|
|
(2,153 |
) |
|
i |
|
|
- |
|
Other accrued expenses |
|
|
5,967 |
|
|
|
- |
|
|
|
4,079 |
|
|
j |
|
|
1,919 |
|
|
m |
|
|
11,965 |
|
Total current liabilities |
|
|
45,483 |
|
|
|
6,341 |
|
|
|
5,124 |
|
|
|
|
|
- |
|
|
|
|
|
56,948 |
|
Earnout consideration |
|
|
77,131 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
77,131 |
|
Long-term debt, non-current |
|
|
45,221 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
3,995 |
|
|
j |
|
|
49,216 |
|
Deferred income tax liabilities |
|
|
287 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
287 |
|
Warrant liability |
|
|
30,770 |
|
|
|
- |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
30,770 |
|
Loans payable |
|
|
- |
|
|
|
3,995 |
|
|
|
- |
|
|
|
|
|
(3,995 |
) |
|
j |
|
|
- |
|
Long-term incentive plan |
|
|
- |
|
|
|
1,765 |
|
|
|
(1,765 |
) |
|
j |
|
|
- |
|
|
|
|
|
- |
|
Other long-term liabilities |
|
|
1,382 |
|
|
|
41 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
1,423 |
|
Total liabilities |
|
|
200,274 |
|
|
|
12,142 |
|
|
|
3,359 |
|
|
|
|
|
- |
|
|
|
|
|
215,775 |
|
Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Common Stock, $0.0001 par |
|
|
15 |
|
|
|
- |
|
|
|
1 |
|
|
g |
|
|
- |
|
|
|
|
|
16 |
|
Share capital |
|
|
- |
|
|
|
113,257 |
|
|
|
(113,257 |
) |
|
g |
|
|
- |
|
|
|
|
|
- |
|
Additional paid-in capital |
|
|
393,872 |
|
|
|
2,912 |
|
|
|
19,360 |
|
|
g |
|
|
- |
|
|
|
|
|
413,232 |
|
|
|
|
|
|
|
|
|
|
(2,912 |
) |
|
g |
|
|
|
|
|
|
|
|
||||
Accumulated other |
|
|
(191 |
) |
|
|
(127 |
) |
|
|
127 |
|
|
g |
|
|
- |
|
|
|
|
|
(191 |
) |
Accumulated deficit |
|
|
(290,407 |
) |
|
|
(106,114 |
) |
|
|
109,710 |
|
|
g |
|
|
- |
|
|
|
|
|
(291,081 |
) |
|
|
|
|
|
|
|
|
|
(1,282 |
) |
|
g |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
(674 |
) |
|
k |
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
(2,314 |
) |
|
g |
|
|
|
|
|
|
|
|
||||
Total stockholders’ equity |
|
|
103,289 |
|
|
|
9,928 |
|
|
|
8,759 |
|
|
|
|
|
- |
|
|
|
|
|
121,976 |
|
Total liabilities and |
|
$ |
303,563 |
|
|
$ |
22,070 |
|
|
$ |
12,118 |
|
|
|
|
$ |
- |
|
|
|
|
$ |
337,751 |
|
See Notes to Unaudited Pro Forma Condensed Combined Financial Information
Notes to Unaudited Pro Forma Condensed Combined Financial Information
Note 1. Basis of Presentation
On September 13, 2021, Spire Global, Inc. (“Spire”) and exactEarth Ltd. (“exactEarth”) each entered into an Arrangement Agreement (“Agreement”) for Spire to acquire exactEarth for a combination of cash and Spire stock (“Acquisition”). The Acquisition was consummated on November 30, 2021 (“Acquisition Date”). All deferred stock unit (“DSUs”) awards of exactEarth were settled for $4.1 million following the consummation of the Acquisition with cash from the purchase consideration. Immediately prior to the consummation of the Acquisition, all other outstanding equity awards of exactEarth were converted to outstanding shares of common stock of exactEarth, as described further in Note 3 to the following unaudited pro forma condensed combined financial information and notes thereto. In connection with the Acquisition, each outstanding share of exactEarth common stock was exchanged for 0.1 shares of Spire common stock and $1.95505 in cash. Holders of exactEarth common stock received cash in lieu of fractional shares. As a result of the Acquisition, former exactEarth common stockholders, restricted share unit (“RSU”) holders and stock option holders, together, received $102.3 million in cash and 5,230,167 in shares of Spire common stock. The total consideration for the Acquisition was $131.9 million, comprised of (i) $109.6 million in cash and (ii) 5,230,167 in shares of Spire common stock valued at $22.3 million based on the closing trading price of Spire common stock as of the Acquisition Date. Of the $109.6 million paid in cash, $3.3 million related to acquisition fees of exactEarth paid by Spire upon the closing of the Acquisition. Of the $131.9 million total consideration for the Acquisition, $129.0 million was allocated to the net assets acquired and $2.9 million was treated as post-combination expense as described further in Note 3 to the following unaudited pro forma condensed combined financial information and notes thereto.
The unaudited pro formas are based on the following as adjusted to give effect to the Acquisition:
The unaudited pro forma condensed combined statements of operations (“pro forma statements of operations”) for the nine months ended September 30, 2021 (“2021 pro forma statement of operations”) and for the year ended December 31, 2020 (“2020 pro forma statement of operations”) give effect to the Acquisition as if it occurred on January 1, 2020. Due to differences in each reporting entity’s fiscal year end, the 2021 pro forma statement of operations includes the nine months ended September 30, 2021 for Spire and the nine months ended July 31, 2021 for exactEarth. The 2020 pro forma statement of operations includes the year ended December 31, 2020 for Spire combined with the year ended October 31, 2020 for exactEarth. The unaudited pro forma condensed combined balance sheet (“pro forma balance sheet”) gives effect to the Acquisition as if it occurred on September 30, 2021, the most recent published balance sheet of Spire and includes pro forma adjustments to exactEarth’s balance sheet as of July 31, 2021. The unaudited pro forma condensed combined financial information has been adjusted to include Acquisition adjustments, which reflect the application of the accounting required by generally accepted accounting principles in the United States (“U.S. GAAP”), applying the effects of the Acquisition to Spire’s historical consolidated financial statements. Certain non-recurring charges have been and may continue to be incurred in connection with the Acquisition, including among others, financial advisors, legal services and professional accounting services. These charges could affect the future results of Spire in the period in which such charges are incurred; however, these costs are not expected to be incurred in any period beyond 12 months from the Acquisition Date. Accordingly, the pro forma statement of operations for
the year ended December 31, 2020 reflects the effects of these non-recurring transaction charges as the pro forma statement of operations has been prepared giving effect to the Acquisition as if it had been consummated on January 1, 2020. The pro forma statements of operations exclude any estimated impact of non-recurring integration costs or benefits from the Acquisition, including potential synergies that may be derived in future periods.
The allocation of the purchase price reflected in this unaudited pro forma condensed combined financial information has not been finalized mainly due to the period of time between the Acquisition Date and the date of this filing, and is based upon the best available information at the current time. A final determination of the fair values of the assets and liabilities will be based on the actual valuations of the tangible and intangible assets and liabilities that existed as of the date of the Acquisition. The completion of the final valuations, the allocation of the purchase price and the impact of ongoing integration activities could cause material differences in the information presented. For the preliminary estimate of fair values of assets acquired and liabilities assumed, Spire used customary valuation methods, including the income, market and cost approaches.
The estimated pro forma adjustments to record assets acquired and liabilities assumed at their fair values are preliminary. The final allocation of the purchase price will be determined at a later date and is dependent upon certain valuation and other studies that have not yet been finalized. The final determination will be completed as soon as practicable, but no later than one year after the consummation of the Acquisition. The final valuation of assets acquired and liabilities assumed may be materially different than the estimated values assumed in the unaudited pro forma condensed combined financial information. In particular, the final fair values of property and equipment, intangible assets, investments and loans payable may be materially different than the estimated values assumed in the unaudited pro forma condensed combined financial information, which may result in material differences in goodwill and depreciation and amortization.
exactEarth’s historical consolidated financial statements were prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board, which differs in certain respects from U.S. GAAP. Adjustments were made to exactEarth’s historical consolidated financial statements to estimate the conversion from IFRS to U.S. GAAP as well as reclassifications to conform exactEarth’s historical presentation to Spire’s accounting presentation. These adjustments reflect Spire’s best estimates based upon the information available to date and are preliminary and subject to change once more detailed information is obtained.
exactEarth’s financial statements were presented in Canadian dollars. Accordingly, the following historical exchange rates were used to translate exactEarth’s financial statements and calculate certain adjustments to the pro forma financial information from Canadian dollars (CAD $) to U.S. dollars ($). These exchange rates may differ from future exchange rates which would have an impact on the pro forma financial information and would also impact the final purchase price consideration upon consummation of the Acquisition.
Average daily closing exchange rate for the year ended October 31, 2020: |
$0.79494/CAD $ |
Average daily closing exchange rate for the year ended December 31, 2020: |
$0.74588/CAD $ |
Average daily closing exchange rate for the nine months ended July 31, 2021: |
$0.79466/CAD $ |
Closing exchange rate as of September 30, 2021: |
$0.78604/CAD $ |
The historical financial statements of Spire and exactEarth have been adjusted in the unaudited pro forma condensed combined financial information to give pro forma effect to the accounting for the Acquisition under U.S. GAAP. The unaudited pro forma condensed combined financial information and related notes were prepared using the acquisition method of accounting in accordance with Accounting Standards Codification (“ASC”) Topic 805, Business Combinations (“ASC 805”), with Spire as the acquiror of exactEarth. ASC 805 requires, among other things, that the assets and liabilities assumed in a business combination be recognized at their fair values as of the acquisition date. For purposes of the unaudited pro forma condensed combined financial information, the purchase consideration in the Acquisition has been allocated to the assets acquired and liabilities assumed of exactEarth based upon Spire management’s preliminary estimate of their fair values as of the Acquisition Date.
In the opinion of Spire’s management, all material adjustments have been made that are necessary to present fairly, in accordance with Article 11 of Regulation S-X of the SEC, the unaudited pro forma condensed combined financial
information. The unaudited pro forma condensed combined financial information does not purport to be indicative of the combined company’s financial position or results of operations of the combined company that would have occurred if the Acquisition had been completed on the dates indicated, nor are they indicative of the combined company’s financial position or results of operations that may be expected for any future period or date.
Certain of exactEarth’s historical amounts have been reclassified to conform to Spire’s financial statement presentation, as described further in Note 4.
The accounting policies under U.S. GAAP used in the preparation of the unaudited pro forma condensed combined financial information are those set forth in Spire’s consolidated financial statements for the year ended December 31, 2020, together with related notes, on Form 424B3 dated July 22, 2021 as filed with the SEC on July 22, 2021, and in Spire’s unaudited condensed consolidated financial statements for the nine months ended September 30, 2021 as filed with the SEC on November 10, 2021.
The accounting policies of exactEarth under IFRS are as described in Note 2 to its historical consolidated financial statements, incorporated by reference within Exhibit 99.1 in this Form 8-K/A.
The preliminary conversion of the exactEarth consolidated financial statements from IFRS to U.S. GAAP, including the impact of conforming to U.S. GAAP accounting policies as applied by Spire, and the translation from Canadian dollar amounts into U.S. dollars is discussed further in Note 2 below.
For Spire, the Acquisition is deemed a nontaxable transaction and as such, the historical tax basis of the acquired assets and assumed liabilities, and other tax attributes of exactEarth carryover to Spire. Historically, exactEarth has recorded a valuation allowance against its net Canada and U.K. deferred tax assets. The deferred tax liability as a result of this Acquisition would be a future source of income to use against exactEarth’s deferred tax assets. As a result, the deferred tax liability from the Acquisition would be fully offset by historical deferred tax assets of exactEarth. For purposes of the pro forma financial information, a valuation allowance continues to be reflected against the remaining exactEarth’s net Canada and U.K. deferred tax assets due to the uncertainty surrounding realization. For purposes of the pro forma financial information, no adjustment to tax expense or benefit has been reflected since (i) a valuation allowance has been reflected against exactEarth net of Canada and U.K. deferred tax assets and (ii) no current tax liabilities are expected to be incurred due to exactEarth’s historical net operating loss and credit carryforwards. Because of the valuation allowance on remaining deferred tax assets after pro forma adjustments, there is no tax provision expense, deferred tax asset or deferred tax liability adjustments reflected in the unaudited pro forma condensed combined financial information.
Note 2. Adjustments to exactEarth’s Financial Statements
The financial information below illustrates the impact of estimated adjustments made to exactEarth’s historical financial statements prepared in accordance with IFRS, in order to present them on a basis consistent with Spire’s accounting presentation and policies under U.S. GAAP. Further review of exactEarth’s detailed accounting policies may identify additional differences between the accounting policies of the two companies that, when conformed, could have a material impact on the financial statements of the combined company. However, at this time, Spire is not aware of any additional accounting policy or IFRS to U.S. GAAP differences that would have a material impact on the unaudited condensed combined pro forma financial information that are not reflected in the pro forma or IFRS to U.S. GAAP adjustments.
Unaudited Adjusted exactEarth Ltd. Statement of Operations
For the Nine Months Ended July 31, 2021 (In thousands)
|
|
|
|
Reclassifications and IFRS to U.S. GAAP |
|
|
|
|
|
|
|||||||||||||||||||||||||
|
Historical exactEarth Ltd. |
|
|
Leases |
|
|
Note 2 |
|
Convertible Debentures |
|
|
Note 2 |
|
Data Rights |
|
|
Note 2 |
|
SIF Loan |
|
|
Note 2 |
|
exactEarth Ltd. |
|
|
exactEarth Ltd. |
|
|||||||
Revenue |
$ |
17,262 |
|
|
$ |
- |
|
|
|
|
$ |
- |
|
|
|
|
$ |
- |
|
|
|
|
$ |
- |
|
|
|
|
$ |
17,262 |
|
|
$ |
13,717 |
|
Cost of revenue |
|
8,439 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
681 |
|
|
c |
|
|
252 |
|
|
d |
|
|
9,372 |
|
|
|
7,448 |
|
Gross profit |
|
8,823 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
(681 |
) |
|
|
|
|
(252 |
) |
|
|
|
|
7,890 |
|
|
|
6,269 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Selling, general and administrative |
|
7,688 |
|
|
|
120 |
|
|
a |
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
7,808 |
|
|
|
6,205 |
|
Product development and |
|
781 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
781 |
|
|
|
621 |
|
Depreciation and |
|
525 |
|
|
|
(115 |
) |
|
a |
|
|
- |
|
|
|
|
|
(85 |
) |
|
c |
|
|
- |
|
|
|
|
|
325 |
|
|
|
258 |
|
Income (loss) from operations |
|
(171 |
) |
|
|
(5 |
) |
|
|
|
|
- |
|
|
|
|
|
(596 |
) |
|
|
|
|
(252 |
) |
|
|
|
|
(1,024 |
) |
|
|
(815 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Other expense |
|
(36 |
) |
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
(36 |
) |
|
|
(29 |
) |
Foreign exchange (loss) gain |
|
(507 |
) |
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
(507 |
) |
|
|
(403 |
) |
Interest income |
|
43 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
43 |
|
|
|
34 |
|
Interest expense |
|
(703 |
) |
|
|
(5 |
) |
|
a |
|
|
198 |
|
|
b |
|
|
- |
|
|
|
|
|
149 |
|
|
d |
|
|
(361 |
) |
|
|
(287 |
) |
Total other expenses |
|
(1,203 |
) |
|
|
(5 |
) |
|
|
|
|
198 |
|
|
|
|
|
- |
|
|
|
|
|
149 |
|
|
|
|
|
(861 |
) |
|
|
(685 |
) |
Income tax expense |
|
109 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
109 |
|
|
|
87 |
|
Net income (loss) |
$ |
(1,483 |
) |
|
$ |
(10 |
) |
|
|
|
$ |
198 |
|
|
|
|
$ |
(596 |
) |
|
|
|
$ |
(103 |
) |
|
|
|
$ |
(1,994 |
) |
|
$ |
(1,587 |
) |
Unaudited Adjusted exactEarth Ltd. Statement of Operations
For the Year Ended October 31, 2020 (In thousands)
|
|
|
|
Reclassifications and IFRS to U.S. GAAP |
|
|
|
|
|
|
|||||||||||||||||||||||||
|
Historical exactEarth Ltd. |
|
|
Leases |
|
|
Note 2 |
|
Convertible Debentures |
|
|
Note 2 |
|
Data Rights |
|
|
Note 2 |
|
SIF Loan |
|
|
Note 2 |
|
exactEarth Ltd. |
|
|
exactEarth Ltd. |
|
|||||||
Revenue |
$ |
19,135 |
|
|
$ |
- |
|
|
|
|
$ |
- |
|
|
|
|
$ |
- |
|
|
|
|
$ |
- |
|
|
|
|
$ |
19,135 |
|
|
$ |
15,211 |
|
Cost of revenue |
|
10,902 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
909 |
|
c |
|
|
|
705 |
|
|
d |
|
|
12,516 |
|
|
|
9,949 |
|
Gross profit |
|
8,233 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
(909 |
) |
|
|
|
|
(705 |
) |
|
|
|
|
6,619 |
|
|
|
5,262 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Selling, general and |
|
8,578 |
|
|
|
166 |
|
|
a |
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
8,744 |
|
|
|
6,951 |
|
Product development and |
|
895 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
895 |
|
|
|
711 |
|
Depreciation and |
|
847 |
|
|
|
(153 |
) |
|
a |
|
|
- |
|
|
|
|
|
(114 |
) |
|
c |
|
|
- |
|
|
|
|
|
580 |
|
|
|
461 |
|
Loss on disposal and impairment |
|
883 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
883 |
|
|
|
702 |
|
Income (loss) from operations |
|
(2,970 |
) |
|
|
(13 |
) |
|
|
|
|
- |
|
|
|
|
|
(795 |
) |
|
|
|
|
(705 |
) |
|
|
|
|
(4,483 |
) |
|
|
(3,563 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||
Foreign exchange (loss) gain |
|
173 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
173 |
|
|
|
138 |
|
Share of equity investment loss |
|
(450 |
) |
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
(450 |
) |
|
|
(358 |
) |
Interest income |
|
82 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
82 |
|
|
|
65 |
|
Interest expense |
|
(1,798 |
) |
|
|
(13 |
) |
|
a |
|
|
440 |
|
|
b |
|
|
- |
|
|
|
|
|
134 |
|
|
d |
|
|
(1,237 |
) |
|
|
(984 |
) |
Total other expenses |
|
(1,993 |
) |
|
|
(13 |
) |
|
|
|
|
440 |
|
|
|
|
|
- |
|
|
|
|
|
134 |
|
|
|
|
|
(1,432 |
) |
|
|
(1,139 |
) |
Income tax expense |
|
148 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
148 |
|
|
|
118 |
|
Net income (loss) |
$ |
(5,111 |
) |
|
$ |
(27 |
) |
|
|
|
$ |
440 |
|
|
|
|
$ |
(795 |
) |
|
|
|
$ |
(571 |
) |
|
|
|
$ |
(6,064 |
) |
|
$ |
(4,820 |
) |
Unaudited Adjusted exactEarth Ltd. Balance Sheet
As of July 31, 2021 (In thousands)
|
|
|
|
Reclassifications and IFRS to U.S. GAAP |
|
|
|
|
|
||||||||||||||||||||||||||||||||
|
Historical exactEarth Ltd. |
|
|
Leases |
|
|
Note 2 |
|
Convertible Debentures |
|
|
Note 2 |
|
Data Rights |
|
|
Note 2 |
|
SIF Loan |
|
|
Note 2 |
|
Myriota IP |
|
|
Note 2 |
|
exactEarth Ltd. |
|
|
exactEarth Ltd. |
|
||||||||
Assets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Current assets: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents |
$ |
7,041 |
|
|
$ |
- |
|
|
|
|
$ |
- |
|
|
|
|
$ |
- |
|
|
|
|
$ |
- |
|
|
|
|
$ |
- |
|
|
|
|
$ |
7,041 |
|
|
$ |
5,646 |
|
Accounts receivable, net |
|
3,153 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
(533 |
) |
|
d |
|
|
- |
|
|
|
|
|
2,620 |
|
|
|
2,101 |
|
Unbilled revenue |
|
1,547 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
1,547 |
|
|
|
1,241 |
|
Prepaid expenses |
|
605 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
909 |
|
|
c |
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
1,514 |
|
|
|
1,214 |
|
Other current assets |
|
329 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
329 |
|
|
|
264 |
|
Total current assets |
|
12,675 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
909 |
|
|
|
|
|
(533 |
) |
|
|
|
|
- |
|
|
|
|
|
13,051 |
|
|
|
10,466 |
|
Property and equipment, |
|
5,037 |
|
|
|
(101 |
) |
|
a |
|
|
- |
|
|
|
|
|
|
|
|
|
|
644 |
|
|
d |
|
|
- |
|
|
|
|
|
5,580 |
|
|
|
4,475 |
|
|
Intangible assets, net |
|
1,155 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
(757 |
) |
|
c |
|
|
- |
|
|
|
|
|
(179 |
) |
|
e |
|
|
219 |
|
|
|
176 |
|
Other long-term assets |
|
412 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
8,258 |
|
|
c |
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
8,670 |
|
|
|
6,953 |
|
Total assets |
$ |
19,279 |
|
|
$ |
(101 |
) |
|
|
|
$ |
- |
|
|
|
|
$ |
8,410 |
|
|
|
|
$ |
111 |
|
|
|
|
$ |
(179 |
) |
|
|
|
$ |
27,520 |
|
|
$ |
22,070 |
|
Liabilities and Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Current liabilities |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Accounts payable and accrued liabilities |
$ |
5,315 |
|
|
$ |
(92 |
) |
|
a |
|
$ |
- |
|
|
|
|
$ |
- |
|
|
|
|
$ |
- |
|
|
|
|
$ |
- |
|
|
|
|
$ |
5,223 |
|
|
$ |
4,188 |
|
Deferred revenue |
|
2,685 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
2,685 |
|
|
|
2,153 |
|
Total current liabilities |
|
8,000 |
|
|
|
(92 |
) |
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
7,908 |
|
|
|
6,341 |
|
Loans payable |
|
1,748 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
3,234 |
|
|
d |
|
|
- |
|
|
|
|
|
4,982 |
|
|
|
3,995 |
|
Long-term incentive plan liability |
|
2,202 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
2,202 |
|
|
|
1,765 |
|
Other long-term liabilities |
|
51 |
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
51 |
|
|
|
41 |
|
Total liabilities |
|
12,001 |
|
|
|
(92 |
) |
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
3,234 |
|
|
|
|
|
- |
|
|
|
|
|
15,143 |
|
|
|
12,142 |
|
Stockholders’ Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Share capital |
|
138,936 |
|
|
|
- |
|
|
|
|
|
2,295 |
|
|
b |
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
141,231 |
|
|
|
113,257 |
|
Additional paid-in capital |
|
1,332 |
|
|
|
- |
|
|
|
|
|
2,299 |
|
|
b |
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
3,631 |
|
|
|
2,912 |
|
Accumulated other |
|
(158 |
) |
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
- |
|
|
|
|
|
(158 |
) |
|
|
(127 |
) |
Accumulated deficit |
|
(132,832 |
) |
|
|
(9 |
) |
|
a |
|
|
(4,594 |
) |
|
b |
|
|
8,410 |
|
|
c |
|
|
(3,123 |
) |
|
d |
|
|
(179 |
) |
|
e |
|
|
(132,327 |
) |
|
|
(106,114 |
) |
Total stockholders’ equity |
|
7,278 |
|
|
|
(9 |
) |
|
|
|
|
- |
|
|
|
|
|
8,410 |
|
|
|
|
|
(3,123 |
) |
|
|
|
|
(179 |
) |
|
|
|
|
12,377 |
|
|
|
9,928 |
|
Total liabilities and |
$ |
19,279 |
|
|
$ |
(101 |
) |
|
|
|
$ |
- |
|
|
|
|
$ |
8,410 |
|
|
|
|
$ |
111 |
|
|
|
|
$ |
(179 |
) |
|
|
|
$ |
27,520 |
|
|
$ |
22,070 |
|
Under IFRS 16, Leases, exactEarth recorded a right of use (“ROU”) asset, lease liability and associated ROU asset depreciation as well as lease interest expense related to their headquarters lease in Cambridge, Ontario. As Spire accounts for leases under ASC 840, Leases, and since the lease would be classified as an operating lease, the ROU asset, depreciation and lease liabilities are removed as of the balance sheet date. The difference between the ROU asset less depreciation and the lease liability is due to the effects of the straight line depreciation method and effective interest method being used. This difference is reconciled with adjustments to lease expense and accumulated deficit.
Under IAS 32, Financial Instruments: Presentation, exactEarth evaluated the terms of the convertible debentures and determined that the instrument contained both a liability and an equity component. The liability component of the convertible debentures was measured at the fair value of a similar liability that does not have an associated equity conversion feature. The equity component was allocated to the residual difference between the fair value of the compound instrument (total proceeds) and the liability component. Based on the contractual terms of the instrument, under U.S. GAAP, no separation between liability and equity is required and the total proceeds were allocated entirely to the liability component and the equity component was therefore eliminated in exactEarth’s historical balance sheet as of July 31, 2021. The loan amount was increased to the amount of cash received for the purpose of recalculating the related interest expense using the updated effective rate of interest. The interest expense adjustments were reflected in the statements of operations for the nine months ended September 30, 2021 and year ended December 31, 2020. The convertible debentures were fully converted in February 2021 and the required adjustments were reflected within the equity section of the pro forma balance sheet.
In accordance with IAS 38, Intangible Assets (“IAS 38”), initial costs incurred to acquire exclusive access rights to data generated from satellites were capitalized by exactEarth. Under U.S. GAAP, the substance of the arrangement is considered to be a hosting arrangement where payments were made in advance to have access to data delivered through the cloud. These payments are not eligible for capitalization under Intangibles – Goodwill and Other - Internal-Use Software (Subtopic 350-40) (“ASC 350-40”) and should be treated as costs incurred under service contracts which are either expensed as incurred or recorded as prepaid expenses to the extent they are paid in advance. The amount originally capitalized under IAS 38 was significantly reduced as a result of impairment charges recognized in prior years. As such, the net book value included in intangible assets, net on exactEarth’s historical consolidated balance sheet as of July 31, 2021 has been removed, as well as the impact of impairment and amortization. Prepaid expenses have been adjusted by the amount paid in advance of services being rendered and the amortization period reflects the term of the hosting arrangement. Accordingly, the amortization expense relating to the intangible asset was reversed in the pro forma statements of operations for the nine months ended September 31, 2021 and the year ended December 31, 2020 and amortization of the prepayments have been recorded to cost of revenue in accordance with ASC 350-40.
Under IAS 20, Accounting for Government Grants and Disclosure, exactEarth initially measured low-interest or interest-free loans from a government at fair value and subsequently recognized interest expense on the loan under the effective interest method. The difference between the fair value at inception and the loan proceeds received was recorded as a government grant. The grant portion was split between operating costs and capital costs based on the costs to which the loan related. The grant related to capital costs was recognized as a reduction to the carrying amount of an eligible asset and realized over the life of the asset as reduced amortization expense. The grant related to operating costs was recognized in cost of revenue. In addition, exactEarth recorded a receivable related to expenses incurred prior to July 31, 2021. Under U.S. GAAP, loans from a government should be considered as a debt instrument and interest may not be imputed on low-interest or interest-free government loans. Therefore, the loan amount has been increased to the amount of cash received and the subsequent interest expense and reduction to cost of revenue and property and equipment have been eliminated to conform with U.S. GAAP. The receivable from the SIF has also been removed as any related expenses incurred are recorded as additional debt once the funding is received in accordance with U.S. GAAP.
Under IAS 38, when it is probable that the acquired asset is expected to have future economic benefits, and the cost of the asset can be measured reliably, the asset shall be treated as an intangible asset. Under U.S. GAAP, costs to acquire in-process research and development assets shall be recorded as research expense at inception if it lacks a future alternative use, in accordance with ASC 730, Research and Development. All research and development costs presented by exactEarth under IFRS have been reclassified from the financial statement line-item intangible assets, net to conform to the presentation applied by Spire in accordance with U.S. GAAP. Refer to Note 4 for the reclassification adjustments.
Note 3. Pro Forma Adjustments Related to the Acquisition
Purchase Price
Total consideration transferred in the Acquisition was $131.9 million, of which $129.0 million is attributable to the purchase price and $2.9 million will be recorded in the post-combination financial statements. The unaudited pro forma condensed combined financial information reflects the preliminary allocation of the purchase consideration to exactEarth’s identifiable net assets acquired. The preliminary allocation of purchase consideration in this unaudited pro forma condensed combined financial information is based upon a purchase price of $129.0 million. The calculation of the purchase price related to the Acquisition is as follows:
(in thousands, except share amounts) |
|
|
|
|
exactEarth share purchase at November 30, 2021 (1) |
|
|
5,230,167 |
|
Total value of Spire shares issued (2) |
|
$ |
22,333 |
|
Total cash consideration paid (3) |
|
|
109,592 |
|
Post-combination expense (4) |
|
|
(2,972 |
) |
Total purchase consideration |
|
$ |
128,953 |
|
|
|
|
|
|
Preliminary Purchase Price Allocation
The preliminary purchase price allocation to assets acquired and liabilities assumed is provided throughout these notes to the unaudited pro forma condensed combined financial information. The following table provides a summary of the preliminary purchase price allocation by major category of assets acquired and liabilities assumed based on Spire management’s preliminary estimate of their respective fair values as of the Acquisition Date (in thousands):
Allocation of total estimated purchase consideration: |
|
|
|
|
|
|
|
|
|
Estimated fair values of net assets acquired: |
|
|
|
|
Cash and cash equivalents |
|
$ |
5,646 |
|
Accounts receivable |
|
|
6,180 |
|
Contract assets |
|
|
1,241 |
|
Prepaid expenses and other current assets |
|
|
1,478 |
|
Property and equipment |
|
|
20,100 |
|
Goodwill |
|
|
54,162 |
|
Customer relationships |
|
|
24,399 |
|
Intangibles |
|
|
19,462 |
|
Investment |
|
|
4,159 |
|
Other assets |
|
|
6,953 |
|
Total assets acquired |
|
|
143,780 |
|
|
|
|
|
|
Accounts payable |
|
|
1,555 |
|
Accrued expenses |
|
|
7,994 |
|
Contract liabilities |
|
|
1,242 |
|
Long-term debt |
|
|
3,995 |
|
Other long-term-liabilities |
|
|
41 |
|
Total liabilities assumed |
|
|
14,827 |
|
|
|
|
|
|
Net assets acquired |
|
$ |
128,953 |
|
The estimated pro forma adjustments to record assets acquired and liabilities assumed at their fair values are preliminary. The final allocation of the purchase price will be determined at a later date and is dependent upon certain valuation and other studies that have not yet been finalized. The final determination will be completed as soon as practicable, but no later than one year after the consummation of the Acquisition. The final valuation of assets acquired and liabilities assumed may be materially different than the estimated values assumed in the unaudited pro forma condensed combined financial information. For the preliminary estimate of fair values of assets acquired and liabilities assumed, Spire used customary valuation methods, including the income, market and cost approaches.
Treatment of exactEarth Equity Awards
exactEarth Stock Options
Upon closing of the Acquisition, each outstanding stock option of exactEarth that was in-the-money, vested or unvested, was net share-settled and exchanged for one fully vested share of exactEarth’s common stock which was immediately converted to one share of Spire’s common stock at a conversion rate of 0.1. This resulted in accelerated vesting for some stock options. Each holder also received $1.95505 per share of exactEarth common stock in cash. All stock options out-of-the-money were cancelled.
Exchanges of share-based payment awards in conjunction with a business combination are modifications of share-based payment awards in accordance with ASC Topic 718, Share-based Payments. Based on management's assessment of the modification and the provisions of ASC 805, incorporating exactEarth and Spire's closing stock prices and the Canadian dollar to U.S. dollar conversion rate on the Acquisition Date, $1.3 million relating to pre-combination service was treated as purchase consideration and $1.0 million relating to post-combination service was immediately expensed in the post-combination financial statements.
exactEarth RSUs
Upon closing of the Acquisition, vesting of all exactEarth outstanding restricted stock unit awards was accelerated and each RSU was exchanged for one fully vested share of exactEarth common stock which was immediately converted to one share of Spire’s common stock at a conversion rate of 0.1. Each RSU holder also received $1.95505 per share of exactEarth common stock in cash.
Based on management's assessment of the modification and the provisions of ASC 805, incorporating exactEarth and Spire's closing stock prices and the Canadian dollar to U.S. dollar conversion rate on the Acquisition Date, $1.8 million relating to pre-combination service was treated as purchase consideration and $1.7 million relating to post-combination service was immediately expensed in the post-combination financial statements.
exactEarth DSUs
All DSUs were fully vested upon initial issuance by exactEarth. Subsequent to the closing of the Acquisition, each DSU was cash-settled for $2.4224.
Based on management’s assessment of the modification and the provisions of ASC 805, incorporating exactEarth and Spire’s closing stock price and the Canadian dollar to U.S. dollar conversion rate on the Acquisition Date, $3.9 million relating to pre-combination service was treated as purchase consideration and $0.2 million relating to post-combination service was immediately expensed in the post-combination financial statements.
Balance Sheet and Statements of Operations
The pro forma adjustments reflect the effect of the Acquisition on Spire’s and exactEarth’s historical consolidated balance sheet as if the Acquisition occurred on September 30, 2021. The pro forma adjustments reflect the effect of the Acquisition on Spire’s and exactEarth’s historical consolidated statements of operations as if the Acquisition occurred on January 1, 2020.
The fair values of identified intangible assets, including the related amortization of the fair values for the nine months ended September 30, 2021 and the year ended December 31, 2020 have been estimated as follows:
|
|
Fair Value |
|
|
Estimated Useful Life |
|
Nine Months Ended September 30, 2021 |
|
|
Year Ended December 31, 2020 |
|
|||
|
|
($ in thousands) |
|
|
(in years) |
|
($ in thousands) |
|
|
($ in thousands) |
|
|||
Trade names |
|
$ |
2,350 |
|
|
5 |
|
$ |
353 |
|
|
$ |
470 |
|
Developed technology |
|
|
13,866 |
|
|
12 |
|
|
867 |
|
|
|
1,156 |
|
Backlog |
|
|
3,246 |
|
|
1 |
|
|
- |
|
|
|
3,246 |
|
Customer relationships |
|
|
24,399 |
|
|
12 |
|
|
1,525 |
|
|
|
2,033 |
|
Total acquired identifiable |
|
|
43,861 |
|
|
|
|
$ |
2,745 |
|
|
$ |
6,905 |
|
Less: exactEarth's historical net |
|
|
176 |
|
|
|
|
|
|
|
|
|
||
Adjustment to intangible assets |
|
$ |
43,685 |
|
|
|
|
|
|
|
|
|
||
The fair values of property and equipment, including the related depreciation of the fair values as of and for the nine months ended September 30, 2021 and the year ended December 31, 2020 have been estimated as follows:
|
|
Fair Value |
|
|
Estimated Useful Life |
|
|
Nine Months Ended September 30, 2021 |
|
|
Year Ended |
|
||||
|
|
($ in thousands) |
|
|
(years) |
|
|
($ in thousands) |
|
|
($ in thousands) |
|
||||
Satellites |
|
$ |
19,503 |
|
|
|
6.6 |
|
|
$ |
2,329 |
|
|
$ |
3,107 |
|
Building improvements |
|
|
5 |
|
|
|
1.0 |
|
|
3 |
|
|
5 |
|
||
Computer hardware |
|
|
564 |
|
|
|
3.6 |
|
|
129 |
|
|
172 |
|
||
Furniture and fixtures |
|
|
28 |
|
|
|
4.0 |
|
|
5 |
|
|
7 |
|
||
Total property and equipment |
|
|
20,100 |
|
|
|
|
|
$ |
2,466 |
|
|
$ |
3,291 |
|
|
Less: exactEarth's historical net |
|
|
4,475 |
|
|
|
|
|
|
|
|
|
|
|||
Adjustment to property and |
|
$ |
15,625 |
|
|
|
|
|
|
|
|
|
|
|||
d. exactEarth Equity Replacement Awards
As described in Note 3(a) above, in connection with the Acquisition, a portion of the fair value of the replacement awards was treated as post-combination expense that is immediately recognized upon replacement. The post-combination expense of $2,972, including applicable employer payroll tax of $0.1 million recognized subsequent to the consummation of the Acquisition has been reflected in the pro forma statement of operations for the year ended December 31, 2020 as follows:
($ in thousands) |
Year Ended December 31, 2020 |
|
|
Cost of revenue |
$ |
315 |
|
Research and development |
|
347 |
|
Sales and marketing |
|
601 |
|
General and administrative |
|
1,839 |
|
Total |
$ |
3,102 |
|
Based on the estimated fair values of identifiable, amortizable intangible assets and property and equipment, the following adjustments to depreciation and amortization have been included in the pro forma statements of operations for the nine months ended September 30, 2021 and year ended December 31, 2020:
($ in thousands) |
|
Nine Months Ended September 30, 2021 |
|
|
Year Ended |
|
||
Amortization of identifiable definite lived intangible assets included |
|
$ |
2,744 |
|
|
$ |
3,659 |
|
Amortization of identifiable definite lived intangible assets included |
|
|
- |
|
|
|
3,246 |
|
Depreciation of property and equipment included in general and |
|
|
138 |
|
|
|
184 |
|
Depreciation of property and equipment included in cost of revenue |
|
|
2,330 |
|
|
|
3,107 |
|
Total calculated depreciation and amortization |
|
|
5,212 |
|
|
|
10,196 |
|
Less: exactEarth’s historical depreciation and amortization |
|
|
259 |
|
|
|
461 |
|
Pro forma adjustment to depreciation and amortization |
|
$ |
4,953 |
|
|
$ |
9,735 |
|
In relation to the Acquisition, Spire distributed $1.5 million in retention bonuses to exactEarth employees for continued service for a certain period of time post-Acquisition. The bonuses amortize over a six-month period and will be treated as post-combination compensation expense. The full amount of expense for the retention bonuses, including applicable employer payroll tax, has been reflected in the pro forma statement of operations for the year ended December 31, 2020 as follows:
($ in thousands) |
|
Year Ended |
|
|
Cost of revenue |
|
$ |
245 |
|
Sales and marketing |
|
|
242 |
|
General and administrative |
|
|
733 |
|
Research and development |
|
|
318 |
|
Total |
|
$ |
1,538 |
|
The estimated adjustments to total stockholders’ equity represent the increase in the DSU liability as explained in Note 3(j), accrual of additional transaction costs incurred subsequent to exactEarth’s balance sheet date as explained
in Note 3(k), the issuance of Spire common stock, a component of the purchase consideration, and the elimination of exactEarth’s historical stockholders’ equity. These adjustments are summarized as follows:
|
|
Acquisition |
|
|||||||||||||||||||||||||
($ in thousands) |
|
exactEarth's |
|
|
Accrued Transaction Costs |
|
|
DSU Liability |
|
|
Adjusted exactEarth Equity (Deficit) |
|
|
Elimination of exactEarth's Equity (Deficit) |
|
|
Issuance of Stock |
|
|
Total Acquisition Adjustments |
|
|||||||
Common stock, $0.0001 par value, Class A and |
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
1 |
|
|
$ |
1 |
|
Common stock |
|
|
113,257 |
|
|
|
- |
|
|
|
- |
|
|
|
113,257 |
|
|
|
(113,257 |
) |
|
|
- |
|
|
|
(113,257 |
) |
Additional paid-in-capital |
|
|
2,912 |
|
|
|
- |
|
|
|
- |
|
|
|
2,912 |
|
|
|
(2,912 |
) |
|
|
19,360 |
|
|
|
16,448 |
|
Accumulated other comprehensive loss |
|
|
(127 |
) |
|
|
- |
|
|
|
- |
|
|
|
(127 |
) |
|
|
127 |
|
|
|
- |
|
|
|
127 |
|
Accumulated deficit |
|
|
(106,114 |
) |
|
|
(1,282 |
) |
|
|
(2,314 |
) |
|
|
(109,710 |
) |
|
|
109,710 |
|
|
|
- |
|
|
|
109,710 |
|
Total entity stockholders' equity (deficit) |
|
$ |
9,928 |
|
|
$ |
(1,282 |
) |
|
$ |
(2,314 |
) |
|
$ |
6,332 |
|
|
$ |
(6,332 |
) |
|
$ |
19,361 |
|
|
$ |
13,029 |
|
To give effect to the Acquisition as if it had occurred on January 1, 2020 for purposes of the pro forma statements of operations, the Spire shares of Class A common stock issued as part of the purchase consideration will be deemed outstanding for the nine months ended September 30, 2021 and year ended December 31, 2020 for purposes of determining the pro forma weighted average shares outstanding calculation which is included in pro forma basic and diluted net loss per share.
As part of the assignment of fair values, the contract liabilities of exactEarth were revalued as of September 30, 2021, resulting in a corresponding adjustment to revenue of $0.9 million in the pro forma statement of operations for the year ended December 31, 2020:
|
|
Fair Value |
|
|
|
|
($ in thousands) |
|
|
Contract liabilities |
|
$ |
1,242 |
|
Less: exactEarth's historical contract liabilities |
|
|
2,153 |
|
Adjustment to contract liabilities |
|
$ |
(911 |
) |
exactEarth records DSUs as a liability on the balance sheet which is marked-to-market each reporting period. As of the Acquisition Date, the DSU liability was $4.1 million and as of July 31, 2021, the DSU liability recorded in exactEarth’s balance sheet was $1.8 million. The cash payment from Spire to settle the DSU liability, as part of the purchase consideration, in the amount of $4.1 million was not received as of the Acquisition Date and as such, payment to settle the DSU liability was made subsequent to September 30, 2021 for purposes of the pro forma balance sheet. Accordingly, an adjustment of $4.1 million is recorded to accounts receivable in the pro forma balance sheet. An adjustment of $2.3 million to the DSU liability has also been recorded to reflect the mark-to-market adjustment as of the Acquisition Date. Additionally, the DSU liability balance of $4.1 million is reflected as a current liability in accrued expenses as the payment was made within a year of the Acquisition Date.
Total transaction costs of $6.5 million are estimated to be incurred in connection with the Acquisition (using the spot rate as of September 30, 2021). As of this date, only a portion of these costs were recorded in the Spire historical balance sheet as of September 30, 2021 in accounts payable or accrued expense and in exactEarth’s balance sheet as of July 31, 2021 in accounts payable and accrued expenses. An adjustment of $2.0 million was made to accounts payable as of September 30, 2021 to reflect the liability for these transaction costs, of which $1.3 million relates to exactEarth and $0.7 million relates to Spire. In the nine months ended September 30, 2021, $1.3 million of transaction costs were recorded to general and administrative expenses on the statement of operations. An adjustment of $6.2 million was recorded to general and administrative expenses on the pro forma statement of operations for the year ended December 31, 2020 to reflect the total estimated transaction costs in connection with the Acquisition, using the average daily closing exchange rate for the year ended December 31, 2020. These transaction costs consist primarily of financial advisor fees, legal fees and professional accounting fees. It is assumed that these costs will not affect the combined statement of operations beyond twelve months after the closing date of the Acquisition.
exactEarth historically applied the equity method of accounting to account for the Myriota investment. The investment was recorded at $0 in exactEarth’s balance sheet as of July 31, 2021, which represented historical cost less exactEarth’s share of Myriota losses. Additionally, $0.4 million was recognized for its share of Myriota’s net loss in the FSLI share of equity investment loss for the year ended October 31, 2020. There was no loss recorded in the statement of operations for the nine months ended July 31, 2021. As part of the assignment of fair values, the investment was valued as of the Acquisition Date, resulting in an adjustment of $4.2 million to the pro forma balance sheet as of September 30, 2021. This adjustment reflects the difference resulting from application of the equity method of accounting and fair value method of accounting, as required under ASC 805.
Giving effect to the pro forma statements of operations as if the Acquisition occurred on January 1, 2020, adjustments of $0.7 million and $0.4 million were recorded for the nine months ended September 30, 2021 and year ended December 31, 2020, respectively, to reflect exactEarth’s share of Myriota’s net losses during those periods.
Note 4. Mapping and Policy Alignment Adjustments Related to the Acquisition
Except for the differences in reporting frameworks as described in Note 2 above, Spire management has determined that there were no significant accounting policy differences between Spire and exactEarth and, therefore, no adjustments are necessary to conform exactEarth financial statements to the accounting policies as applied by Spire in the preparation of the unaudited pro forma condensed combined financial information. This conclusion is subject to change as further assessment is performed and finalized for purchase accounting.
Certain historical balances of the Spire and exactEarth financial statement line items (“FSLI”) were reclassified to conform to the combined company presentation of the unaudited pro forma condensed combined financial information, as presented above. These reclassifications have no effect on previously reported total assets, total liabilities, stockholders’ equity or income (loss) of Spire and exactEarth.
Statements of Operations
Balance Sheet