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What changed in Redwire Corp's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Redwire Corp's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+500 added−752 removedSource: 10-K (2024-03-20) vs 10-K (2023-03-31)

Top changes in Redwire Corp's 2023 10-K

500 paragraphs added · 752 removed · 357 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

59 edited+39 added−109 removed12 unchanged
Biggest changeUpon the formation of these acquisition vehicles, Cosmos effected a number of acquisitions through its wholly owned subsidiary, Cosmos Acquisition, LLC. Following the acquisitions, the Successor became a wholly owned subsidiary of Holdings. The Company has grown organically while also continuing to integrate several acquisitions from a fragmented landscape of space-focused technology companies with innovative capabilities and deep flight heritage.
Biggest changeThe Company has grown organically while also continuing to integrate several acquisitions from a fragmented landscape of space-focused technology companies with innovative capabilities and deep flight heritage. Strategic acquisitions that augment our core space infrastructure offerings are a key part of our growth strategy.
With decades of proven flight heritage uniquely combined with innovative products and culture, Redwire is uniquely positioned to assist our customers in solving the complex challenges of future space missions and industries.
With decades of proven flight heritage combined with innovative products and culture, Redwire is uniquely positioned to assist our customers in solving the complex challenges of future space missions and industries.
While our intellectual property rights in the aggregate are important to our operations, we do not believe that any particular trade secret, patent, trademark, copyright, license or other intellectual property right is of such importance that its loss, expiration or termination would have a material effect on our business.
While our intellectual property rights in the aggregate are important to our operations, we do not believe any particular trade secret, patent, trademark, copyright, license or other intellectual property right is of such importance that its loss, expiration or termination would have a material effect on our business.
Some of our competitors in each of our markets are larger than we are and can maintain higher levels of expenditures for research and development. In each of our markets, we concentrate on the opportunities that we believe are compatible with our resources, overall technological capabilities and objectives.
Some of our competitors in each of our markets are larger than we are and can maintain higher levels of expenditures for research and development. In each of our markets, we concentrate on the opportunities we believe are compatible with our resources, overall technological capabilities and objectives.
Redwire has three primary areas of focus that form our business: (1) Enabling space mission providers, such as government agencies and large prime contractors, with a broad portfolio of space infrastructure, systems, subsystems, and components; (2) Providing the infrastructure and technology needed for people to permanently live and work in space; and (3) assisting international spacefaring allies in the development of organic space capabilities.
Redwire has three primary areas of focus that form our business: (1) Enabling space mission providers, such as government agencies and large prime contractors, with a broad portfolio of space infrastructure, systems, subsystems, and components; (2) Providing the infrastructure and technology needed for people to explore, live and work in space; and (3) Assisting international spacefaring allies in the development of organic space capabilities.
Intellectual Property We own a substantial intellectual property portfolio that includes many U.S. and foreign patents, as well as many U.S. trademarks, domain names and copyrights. We actively pursue internal development of intellectual property. In addition to our patent portfolio, we own other intellectual property such as unpatented trade secrets, know-how, data and software.
Page 8 Intellectual Property We own a substantial intellectual property portfolio that includes many U.S. and foreign patents, as well as many U.S. trademarks, domain names and copyrights. We actively pursue internal development of intellectual property. In addition to our patent portfolio, we own other intellectual property such as unpatented trade secrets, know-how, data and software.
Page 13 Available Information Copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are available free of charge through our website (www.redwirespace.com) as soon as reasonably practicable after we electronically file the material with, or furnish it to, the Securities and Exchange Commission.
Available Information Copies of our Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, and amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) are available free of charge through our website (www.redwirespace.com) as soon as reasonably practicable after we electronically file the material with, or furnish it to, the SEC.
This market environment may result in increased pressures on our pricing and other competitive factors. Page 11 Resources Research and Development Our research and product development programs are intended to advance the future of space infrastructure. We have both internally and externally funded research and development projects.
This market environment may result in increased pressures on our pricing and other competitive factors. Resources Research and Development Our research and product development programs are intended to advance the future of space infrastructure. We have both internally and externally funded research and development projects.
Page 12 International Traffic in Arms Regulations and Export Controls Our orbital infrastructure business is subject to, and we must comply with, stringent U.S. import and export control laws, including the International Traffic in Arms Regulations (“ITAR”), Export Administration Regulations (“EAR”) of the Bureau of Industry and Security of the U.S.
International Traffic in Arms Regulations and Export Controls Our orbital infrastructure business is subject to, and we must comply with, stringent U.S. and international import and export control laws, including the International Traffic in Arms Regulations (“ITAR”), Export Administration Regulations (“EAR”) of the Bureau of Industry and Security of the U.S.
Projects for these customers are typically meant to gather data for the public’s use, advance research objectives, further the exploration and utilization of space, and/or develop new scientific and commercial applications and uses of the space domain. Contracts are primarily fielded by governmental entities that are not funded by defense budgets.
Civil Space Community Relationships Projects for these customers are typically meant to gather data for the public’s use, advance research objectives, further the exploration and utilization of space, and/or develop new scientific and commercial applications and uses of the space domain. Contracts are primarily fielded by governmental entities that are not funded by defense budgets.
Our defense prime contractor customers could decide to pursue one or more of our product development areas as a core competency and insource that technology development and production rather than purchase that capability from us as a supplier. This competition could result in fewer customer orders and a loss of market share.
Our customers could decide to pursue one or more of our product development areas as a core competency and insource that technology development and production rather than purchase that capability from us as a supplier. This competition could result in fewer customer orders and a loss of market share.
We frequently “partner” or are involved in subcontracting and teaming relationships with companies that are, from time to time, competitors on other programs. We compete domestically and internationally against space systems components providers, including Amergient Technologies, Space Micro Inc., Rocket Lab Space Systems (a segment of Rocket Labs), and in some instances against large companies such as Northrup Grumman.
We frequently “partner” or are involved in subcontracting and teaming relationships with companies that are, from time to time, competitors on other programs. We compete domestically and internationally against space systems components providers, including Moog Inc., Space Micro Inc., Rocket Lab USA, Inc. (a segment of Rocket Labs), and in some instances against large companies such as Northrup Grumman.
(“GPAC”) was consummated pursuant to the Agreement and Plan of Merger (the “Merger Agreement”) dated March 25, 2021 by and among GPAC, Shepard Merger Sub Corporation (“Merger Sub”), a Delaware corporation and direct, wholly owned subsidiary of GPAC, Cosmos Intermediate, LLC and Holdings.
(“GPAC”) was consummated pursuant to the Agreement and Plan of Merger (the “Merger Agreement”) dated March 25, 2021 by and among GPAC, Shepard Merger Sub Corporation (“Merger Sub”), a Delaware corporation and direct, wholly owned subsidiary of GPAC, Cosmos Intermediate, LLC and Redwire, LLC (“Holdings”).
Human Capital We are committed to technical excellence and mission success which is reinforced by our core values: • Integrity: We stand for honesty, fairness, and commitment in all that we do, and an uncompromising adherence to ethical behavior. • Innovation: We are change agents. We find new ways to solve our customers’ most challenging problems.
Page 9 We are committed to technical excellence and mission success which is reinforced by our core values: • Integrity: We stand for honesty, fairness, and commitment in all that we do, and an uncompromising adherence to ethical behavior. • Innovation: We are change agents. We find new ways to solve our customers’ most challenging problems.
The information contained on the Company’s website is not included in, nor incorporated by reference into, this Annual Report on Form 10-K. Page 14
The information contained on the Company’s website is not included in, nor incorporated by reference into, this Annual Report on Form 10-K.
Of particular note, our patented and award-winning ROSA (Roll-Out Solar Array) technology features an innovative “roll-out” design which uses composite booms to serve as both the primary structural elements and the deployment actuator, and a modular photovoltaic blanket assembly that can be configured into a variety of solar array architectures.
Our patented and award-winning Roll-Out Solar Array (“ROSA”) technology features an innovative “roll-out” design that uses composite booms to serve as both the primary structural elements and the deployment actuator, and a modular photovoltaic blanket assembly that can be configured into a variety of solar array architectures.
A reverse recapitalization does not result in a new basis of accounting, and the consolidated financial statements of the combined entity represent the continuation of the consolidated financial statements of the Company in many respects. MIS was deemed the accounting predecessor and the combined entity is the successor SEC registrant, Redwire Corporation.
A reverse recapitalization does not result in a new basis of accounting, and the consolidated financial statements of the combined entity represent the continuation of the consolidated financial statements of the Company in many respects. MIS (a wholly-owned subsidiary of Holdings) was deemed the accounting predecessor and the combined entity is the successor SEC registrant, Redwire Corporation.
Satellite Technology We provide the P200 small satellite platform which is capable of supporting payloads up to 70 kg and targets spacecraft mass less than 200 kg, making it compatible with typical shared launch opportunities and small satellites launchers.
Redwire provides the P200 small satellite platform which is capable of supporting payloads up to 70 kg and targets spacecraft mass less than 200 kg, making it compatible with typical shared launch opportunities and small satellite launchers.
Our business strategy is dependent on technological advancements that support our existing and future products and solutions. Our focus for research and development aligns with our strategic focus areas outlined above with particular emphasis on areas of significant growth and long-term opportunity.
Our business strategy is dependent on technological advancements that support our existing and future core space infrastructure offerings. Our focus for research and development aligns with our strategic focus areas outlined above with particular emphasis on areas of significant growth and long-term opportunity.
As of December 31, 2022, the Company operated in one operating segment and one reportable segment: space infrastructure. Refer to Note B of the accompanying notes to the consolidated financial statements for additional information regarding this conclusion.
As of December 31, 2023, the Company operated in one operating segment and one reportable segment: space infrastructure. Refer to Note B – Summary of Significant Accounting Policies of the accompanying notes to the consolidated financial statements for additional information regarding this conclusion.
As space becomes an increasingly contested domain and near peer threats continue to emerge, the DoD has articulated a need for significant investment in both improving the resiliency of existing space assets and the deployment of new, next-generation capabilities.
As space becomes an increasingly contested domain and near peer threats continue to emerge, the U.S. and other nations have articulated a need for significant investment in both improving the resiliency of existing space assets and the deployment of new, next-generation capabilities.
Page 5 From time to time, the Company will acquire or dispose of businesses and realign contracts, programs or businesses among and within our organization. These realignments are typically designed to leverage existing capabilities more fully and to enhance efficient development and delivery of products and services.
From time to time, the Company will acquire or dispose of businesses and realign contracts, programs or businesses among and within our organization. These realignments are typically designed to leverage existing capabilities more fully and to enhance efficient development and delivery of our core space infrastructure offerings.
National Security Community Relationships We supply a wide variety of technologies and solutions supporting the U.S. and allied countries’ national security objectives in space.
National Security Community Relationships We supply a wide variety of technologies included in our core space infrastructure offerings supporting the U.S. and allied countries’ national security objectives in space.
The Company, in its current form, was founded in 2020 by private equity firm AE Industrial Partners Fund II, LP (“AEI”), but the heritage of the various businesses that were brought together to form Redwire stretch back decades.
“Risk Factors.” History Redwire was founded in 2020 by private equity firm AE Industrial Partners Fund II, LP (“AEI”), but the heritage of the various businesses that were brought together to form Redwire stretches back decades.
As a result, we may face a transition to the small satellite licensing guidelines. Additionally, the FCC is currently considering additional rules which could change the operational, technical and financial requirements for commercial space operators subject to U.S. jurisdiction.
The FCC enacted a new set of licensing guidelines for small satellites and related systems that may apply to future spacecraft. As a result, we may face a transition to the small satellite licensing guidelines. Additionally, the FCC is currently considering additional rules which could change the operational, technical and financial requirements for commercial space operators subject to U.S. jurisdiction.
Management monitors the changing labor conditions at a national and local level and adjusts compensation packages in order to attract and retain high performing individuals. The Company offers short- and long-term incentive programs, a defined contribution plan, healthcare benefits, flexible paid time off as well as employee assistance programs.
Management monitors the changing labor conditions at a national and local level and adjusts compensation packages in order to attract and retain high performing individuals. The Company offers short- and long-term incentive programs, retirement and healthcare benefits, flexible paid time off and employee assistance programs. The Company’s incentive programs are intended to motivate and reward strong performance.
We are implementing programs that celebrate the diversity of our workforce and highlight the contributions of under-represented communities. Through our leadership communications, community sponsorships and policy development, we are committed to a culture that promotes diversity and inclusion throughout the company and our industry. Compensation and Benefits We strive to offer competitive salaries and benefits.
Through our leadership communications, community sponsorships and policy development, we are committed to a culture that promotes diversity and inclusion throughout the Company and our industry. Compensation and Benefits We strive to offer competitive salaries and benefits.
Business Strategy With decades of flight heritage combined with the agile and innovative culture of a commercial space platform, we are uniquely positioned to assist our customers in solving the complex challenges of future space missions. Redwire is providing core technologies that form the foundational building blocks for the future of space infrastructure.
Business Strategy With decades of flight heritage combined with the agile and innovative culture of a commercial space platform, we are uniquely positioned to assist our customers in solving the complex challenges of future space missions.
Looking forward, we expect to continue our investment in fields that we believe offer the greatest opportunities for long-term growth and profitability. We conduct research and development principally in the United States and Luxembourg. Research and development expenses were $4.9 million for the year ended December 31, 2022.
Looking forward, we expect to continue our investment in fields we believe offer the greatest opportunities for long-term growth and profitability. We conduct research and development principally in the U.S. and Belgium. Research and development expenses were $5.0 million for the year ended December 31, 2023.
Cloud-enabled Digital Engineering Enterprise Software Platform Redwire sells a proprietary enterprise software suite that enables advanced digital engineering and generation of high fidelity, interactive modeling and simulations of individual components, entire spacecraft and full constellations in a cloud-based Software as a Service (“SaaS”) business model.
Redwire has a proprietary enterprise software suite that enables digital engineering and generation of high-fidelity, interactive modeling and simulations of individual components, entire spacecraft and full constellations in a cloud-based environment.
Our offerings include: Power Solutions: We offer a variety of solar array solutions for spacecraft spanning the entire spectrum of satellite size, power needs, and orbital location. We possess proprietary technologies, technical knowhow, and the facilities to design, build, and deliver competitive power generation solutions tailored to customer need.
Power Generation Power generation is critical for space endeavors. Redwire offers a variety of solar array solutions for spacecraft spanning the spectrum of size, power needs, and orbital location. We possess proprietary technologies, technical know-how, and the facilities to design, build, and deliver competitive power generation solutions tailored to customer need.
With the recently renewed global fascination with space, international spacefaring allies demand for the products and services of a provider like Redwire may increase as they seek to develop their organic space capabilities.
With the increasing importance of space for national security and economic development, international spacefaring allies’ demand for the products and services of a provider like Redwire may increase as they seek to develop their organic space capabilities.
Redwire is a global leader in space infrastructure enabling space mission providers with the foundational building blocks needed for their complex space missions to succeed. Space infrastructure is critical to our terrestrial economy in areas such as telecommunications, navigation and timing, climate monitoring, weather forecasting, Earth observation, national security, and even planetary defense.
With our core space infrastructure offerings, Redwire is a leading innovator in space infrastructure, enabling space mission providers with the foundational building blocks and integrated solutions needed for complex space missions. Space infrastructure is critical to our terrestrial economy in areas, such as national security, telecommunications, navigation and timing, and Earth observation.
Customer Concentration The majority of the Company’s revenues are derived from government contracts. Refer to Note S of the accompanying notes to the consolidated financial statements for further information on sales by major customers and location.
Refer to Note Q – Revenues of the accompanying notes to the consolidated financial statements for further information on sales by major customers and location.
With the acquisition of Belgium-based Redwire Space NV (“Space NV”), we have a unique portfolio of highly synergistic and complementary core space infrastructure offerings that significantly enhance our access to addressable markets in Europe and the rest of the world.
We have a unique portfolio of highly synergistic and complementary core space infrastructure offerings that significantly enhance our access to addressable markets in Europe and the rest of the world. For a discussion of risks associated with our operations, refer to Item 1A.
For further information, refer to “Backlog” in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” (“MD&A”). Seasonality No material portion of our business is considered to be seasonal. Various factors can affect the distribution of our revenue between accounting periods, including the timing of contract awards and the timing and availability of U.S.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations”. Seasonality No material portion of our business is considered to be seasonal. Various factors can affect the distribution of our revenue between accounting periods, including the timing of contract awards and the timing and availability of customer funding, as well as the timing of product deliveries and customer acceptance.
Diversity and Inclusion Redwire is committed to recruiting, retaining and promoting a diverse workforce. We support several organizations supporting diversity in the aerospace field, such as: the Brooke Owens Fellowship, the Matthew Isakowitz Fellowship, and the ZED Factor Fellowship program. At Redwire, Inclusion is a core value.
We support several organizations supporting diversity in the aerospace field, such as: the Brooke Owens Fellowship, the Matthew Isakowitz Fellowship, and the ZED Factor Fellowship program. At Redwire, Inclusion is a core value. We are implementing programs that celebrate the diversity of our workforce and highlight the contributions of under-represented communities.
We have provided services and products supporting a number of other NASA missions, including sun sensors and star trackers for exploration missions like Perseverance, thermal control solutions for technology demonstrators, camera systems for upcoming human spaceflight missions, and development of various additive manufacturing methods on the ISS.
We have provided services and products supporting a number of other NASA and ESA missions, including solar arrays and navigation equipment for NASA’s recent DART mission, on-board computers for ESA’s Hera and Comet Interceptor missions, sun sensors and star trackers for exploration missions like NASA’s Perseverance, thermal control solutions for technology demonstrators, and camera systems for upcoming human spaceflight missions.
As a result, reviews of our payloads by AST will occur during, for example, the processing of a launch vehicle provider launch license.
The AST office predominantly processes launch license requests submitted by launch vehicle operators, which include information on the constituent payloads flying on any given mission. As a result, reviews of our payloads by AST will occur during, for example, the processing of a launch vehicle provider launch license.
The P200 platform is an evolution of the PROBA platform which has acquired extensive flight heritage, accumulating more than 25 years in orbit without failure on any of the launched satellites. Space-Qualified Sensors We have a deep heritage in manufacturing space-qualified sensors.
The P200 platform is an evolution of the PROBA platform which has acquired extensive flight heritage, accumulating more than 25 years in orbit without failure on any of the launched satellites. We are leading small satellite pioneering research missions like PROBA-1, ESA’s small satellite with fully autonomous capabilities and PROBA-V, ESA’s operational Earth observation mission based on a small satellite.
Regulatory Federal Communications Commission The regulations, policies and guidance issued by the Federal Communications Commission (“FCC”) apply to the operation of our spacecraft. When we communicate with our spacecraft using any part of the electromagnetic spectrum, we are operating a space station to which FCC regulations apply.
When we communicate with our spacecraft using any part of the electromagnetic spectrum, we are operating a space station to which FCC regulations apply. Operators of regulated space stations are required to hold and maintain compliance with proper licenses throughout the duration of any given mission.
We are currently assessing the applicability of NOAA’s licensing requirements and exclusions in connection with the Archinaut One program. The Federal Aviation Administration As a participant in launch activities, we are indirectly subject to the license requirements of the Federal Aviation Administration’s (“FAA”) Office of Commercial Space Transportation (“AST”).
The Federal Aviation Administration As a participant in launch activities, we are indirectly subject to the license requirements of the Federal Aviation Administration’s (“FAA”) Office of Commercial Space Transportation (“AST”). The FAA regulates the airspace of the United States, through which launch vehicles must fly during launch to orbit.
In manufacturing our products, we use our own production capabilities as well as a base of third-party suppliers and subcontractors. Certain aspects of our manufacturing activities require relatively scarce raw materials; occasionally, we have experienced difficulty in our ability to procure raw materials, components, sub-assemblies and other supplies required in our manufacturing process.
Certain aspects of our manufacturing activities require relatively scarce raw materials; occasionally, we have experienced difficulty in our ability to procure raw materials, components, sub-assemblies and other supplies required in our manufacturing process. Regulatory Federal Communications Commission The regulations, policies and guidance issued by the Federal Communications Commission (“FCC”) apply to the operation of our spacecraft.
We offer a broad array of products and services, many of which have been enabling space missions since the 1960s and have been flight-proven on over 200 spaceflight missions, including missions such as the GPS constellation, New Horizons and Perseverance.
Our core space infrastructure offerings include a broad array of modern products and services, which have been enabling space missions since the 1960s and have been flight-proven on over 200 spaceflight missions, including missions such as the National Aeronautics and Space Administration’s (“NASA”) Artemis program, New Horizons and Perseverance, the Space Force’s GPS, and the European Page 3 Space Agency’s (“ESA”) Project for On-Board Autonomy (“PROBA”) programs.
Government funding, as well as the timing of product deliveries and customer acceptance. Customers and Strategic Partnerships / Relationships Our product and solution offerings are designed to meet the needs of a wide variety of public and private entities operating in space.
Customers and Strategic Partnerships / Relationships Our core space infrastructure offerings are designed to meet the needs of a wide variety of public and private entities operating in space. We have formalized contracts and strategic partnerships with numerous customers, and we plan to continue pursuing additional agreements and partnerships.
Strategic acquisitions that augment our technology and product offerings are a key part of our growth strategy. We have completed nine acquisitions since March 2020, which collectively have provided us with a wide variety of complementary technologies and solutions to serve our target markets and customers.
We have completed nine acquisitions since March 2020, which collectively have provided us with a broad portfolio of complementary technologies and solutions to serve our target markets and customers. These acquisitions include: • 2020 – Acquired Redwire Space Components, LLC (f/k/a Adcole Space, LLC), Redwire Space Sensors, Inc.
When configured for launch, ROSA stows into a compact cylindrical volume yielding efficient space utilization. The unique ROSA stowed configuration allows extremely large solar arrays to be stowed compactly within launch vehicles. Composite Booms: We develop cost-effective, furlable composite boom products that deploy antennas and instruments from small satellites.
When configured for launch, ROSA stows into a compact cylindrical volume yielding efficient space utilization. The unique ROSA stowed configuration allows extremely large solar arrays to be stowed compactly within launch vehicles. Redwire has completed over 5 successful power generation system deployments on flight missions in LEO, GEO, and deep space.
Contracted backlog represents the estimated dollar value of firm funded executed contracts for which work has not been performed (also known as the remaining performance obligations on a contract). Uncontracted backlog represents the anticipated contract value, or portion thereof, of goods and services to be delivered under existing contracts which have not been appropriated or otherwise authorized.
As of December 31, 2023, our total contracted backlog was $372.8 million. Contracted backlog represents the estimated dollar value of firm funded executed contracts for which work has not been performed (also known as the remaining performance obligations on a contract). For further information, refer to “Backlog” in Item 7.
Payload Adapters: We are a supplier of integrated structural systems that support multiple satellites of different sizes across multiple launch vehicle platforms. Our payload interface solutions are tailored to launch vehicle/payload requirements to achieve optimal performance, and efficient allocation of mass to support on-orbit function rather than launch vehicle interfaces.
Our payload interface solutions are tailored to launch vehicle/payload requirements to achieve optimal performance, and efficient allocation of mass to support on-orbit function rather than launch vehicle interfaces. We also support missions by providing mechanical ground support equipment, assist with payload and launch vehicle integration, environmental testing and analysis services, and thermal control.
Commercial Community Relationships Through our numerous strategic partnerships with large and high-profile commercial customers, we believe that our technologies are enabling the commercialization of LEO and potentially beyond. We view the commercial market opportunity as one with significant growth possibilities as launch costs continue to decrease, making industrial and other commercial pursuits increasingly viable and prolific.
We view the commercial market opportunity as one with significant growth possibilities as launch costs continue to decrease, making industrial and other commercial pursuits increasingly viable. Customer Concentration The majority of the Company’s revenues are derived from government contracts.
Raw Materials and Suppliers We are generally engaged in light manufacturing activities and have limited exposure to fluctuations in the supply of raw materials. When we manufacture and sell products and systems, most of the value that we provide is labor oriented, such as design, engineering, assembly and test activities.
Raw Materials and Suppliers We are generally engaged in light manufacturing activities and have limited exposure to fluctuations in the supply of raw materials. In manufacturing our products, we use our own production capabilities as well as a base of third-party suppliers and subcontractors.
Item 1. Business Redwire is a global leader in mission critical space solutions and high reliability components for the next generation space economy, with valuable intellectual property for solar power generation, in-space 3D printing and manufacturing, avionics, critical components, sensors, digital engineering and space-based biotechnology. We combine decades of flight heritage with the agile and innovative culture.
Item 1. Business General Redwire is a global leader in mission critical space solutions and high-reliability space infrastructure for the next generation space economy. Our “Heritage plus Innovation” strategy enables us to combine decades of flight heritage with an agile and innovative culture creating new, innovative technologies that are the building blocks of space infrastructure for government and commercial customers.
Our recruitment efforts are focused on hiring diverse space-industry experienced talent who are attracted to the Redwire Mission. As we continue to grow, we are increasing our recruiting capacity by expanding our talent acquisition team of professionals, utilizing AI sourcing tools, and enhancing internal incentives for recruitment.
As we continue to grow, we are increasing our recruiting capacity by utilizing artificial intelligence (“AI”) sourcing tools, and enhancing internal incentives for recruitment. Diversity and Inclusion Redwire is committed to recruiting, retaining and promoting a diverse workforce.
We offer a wide variety of antennas to meet a range of satellite mission requirements. Our Link-16 antenna can be used to facilitate the exchange of tactical imagery from space in near-real time between military aircraft, ships and ground forces. Our antennas also enable the exchange of encrypted messages, imagery data and multiple channels of digital voice communication.
Redwire has developed antennas, compatible with the Link-16 data link network used by the North Atlantic Treaty Organization (“NATO”) members and other nations, which can be used to facilitate the exchange of jam-resistant, encrypted tactical data from space in near-real time between military aircraft, ships and ground forces.
Individuals from all backgrounds, experiences and skill sets are needed to make Redwire successful. We value each other. • Excellence: We are focused professionals who are committed to delivering results. We strive to be the employer of choice in the space community. As of December 31, 2022, we had approximately 700 employees based in the United States, Belgium and Luxembourg.
Individuals from all backgrounds, experiences and skill sets are needed to make Redwire successful. We value each other. • Excellence: We are focused professionals who are committed to delivering results. Recruitment We have an experienced talent acquisition team and our recruitment efforts are focused on hiring diverse space-industry experienced talent who are attracted to Redwire’s core values.
We are also a provider of innovative technologies with the potential to help transform the economics of space and create new markets for its exploration and commercialization. Examples of our proprietary technologies include deployable structures, roll out solar array (“ROSA”) systems, human-rated camera systems, in-space servicing, assembly and manufacturing (“ISAM”) products, and advanced payload adapters.
We are also a provider of innovative technologies with the potential to help transform the economics of space and create new markets for its exploration and commercialization. Redwire’s broad portfolio of core offerings, plus our domestic and international reach, allows us to participate in national security, civil, and commercial space markets globally.
The regulations exist to advance the national security and foreign policy interests of the United States and EU, as applicable.
The regulations exist to advance the national security and foreign policy interests of the U.S. and EU, as applicable. Human Capital We strive to be the employer of choice in the space community. As of December 31, 2023, we had approximately 700 employees based in the U.S. and Europe.
Many of these contracts will have a research and demonstration phase which may later convert to full-scale production contracts or commercial opportunities. NASA NASA is one of our largest and most long-standing customers. We participate in numerous large, high-profile contracts, such as the Artemis program.
Many of these contracts will have a research and demonstration phase which may later convert to full-scale production contracts or commercial opportunities. Redwire performs either directly or through large prime contractors for many civil agencies, including but not limited to NASA, ESA and other ESA member nation agencies.
This focus area includes in-space additive manufacturing, space-based biotechnology applications, space plant and animal science, in-space advanced material manufacturing and support of human exploration, habitation and commercial activities in space. We created the first permanent commercial manufacturing platform to operate in LEO, the Additive Manufacturing Facility (“AMF”).
Redwire’s microgravity payloads are developing next-generation capabilities and services that benefit from microgravity environments or are required to develop space infrastructure. This includes space-based biotechnology applications, space plant and animal science, in-space additive manufacturing, Page 6 in-space advanced material manufacturing and support of human exploration and habitation.
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Our “Heritage plus Innovation” strategy enables us to combine proven performance with new, innovative capabilities to provide our customers with the building blocks for the present and future of space infrastructure. Our mission is to accelerate humanity’s expansion into space by delivering reliable, economical and sustainable infrastructure for future generations.
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Redwire’s primary business model is to provide mission critical solutions based on core space infrastructure offerings for government and commercial customers through long-duration projects. These core offerings include leading technologies and production capability for avionics and sensors; power generation; structure and mechanisms; radio frequency (“RF”) systems; platforms, payloads and missions; and microgravity payloads.
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Redwire does not offer full mission solutions for all these areas, but our government and marquee customers such as government agencies and large prime contractors do.
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A majority of our projects result in funded technology development and as a result, we benefit from continuous innovation aligned to our three primary focus areas as described below. Our mission is to accelerate humanity’s expansion into space by delivering reliable, economical and sustainable infrastructure for future generations.
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Of particular note, our ROSA arrays have been installed on the International Space Station (“ISS”) to efficiently augment its power generation capabilities as the ISS enters its next decade of operations. ROSA systems are experiencing significant market adoption, being utilized not only on the ISS but also on National Aeronautics and Space Administration’s (“NASA”) Double Asteroid Redirect Test mission.
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(f/k/a Deep Space Systems, Inc.), In Space Group, Inc. and its subsidiaries, Redwire Space, Inc. (f/k/a Made In Space, Inc.) and Made in Space Europe S.a.r.l (collectively “MIS”), Redwire Space Solutions, LLC (f/k/a Roccor, LLC), and LoadPath, LLC. • 2021 – Acquired Oakman Aerospace, LLC, Redwire Space Enterprises, Inc. (f/k/a Deployable Space Systems, Inc.), and Redwire Space Technologies, Inc.
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Other ROSA systems are being developed and delivered for the OVZON-3 telecommunications satellite, the Power and Propulsion Element for the NASA Lunar Gateway, and other programs. Many Redwire products and services are experiencing similar adoption.
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(f/k/a Techshot, Inc.). • 2022 – Acquired Redwire Space NV (f/k/a Qinetiq Space NV), (“Space NV”). On September 2, 2021, the Merger (the “Merger”) with Genesis Park Acquisition Corp.
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Page 3 Redwire plays a critical role for people to Explore, Live and Work in space. • Explore: For decades, we have played a critical role in historic space exploration missions, such as NASA’s Mars Perseverance Rover.
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Our technology innovation is centered on the following core space infrastructure offerings: • Avionics and Sensors; Page 4 • Power Generation; • Structures and Mechanisms; • Radio Frequency Systems; • Platforms, Payloads and Missions; and • Microgravity Payloads.
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More recently, we served our partner Lockheed Martin and our customer NASA by providing the “Eyes of Orion” for NASA’s Artemis I mission. • Live: NASA has laid out a plan to decommission and deorbit the ISS by 2031. As a result, commercial space station development to replace the ISS is anticipated to occur over the next eight years.
Added
These core space infrastructure offerings have broad utility to nearly all space markets and many space assets that are being developed by national security space customers, civil space agencies and commercial companies globally.
Removed
Redwire ROSA power solutions, berthing and docking mechanisms, robotics and other key technologies are expected to be major subsystems for this opportunity. • Work: We are a leader in microgravity research and development on the ISS, with over 20 payloads developed and deployed.
Added
Our technology depth and customer base positions Redwire in multiple space markets which provides a strategic advantage by reducing the potential impact of disruptions stemming from any one market, customer or technology. Redwire’s strategy to accelerate growth includes bundled sales and increased levels of offering integrations, such as systems, payloads, spacecraft and full satellite mission solutions.
Removed
As commercial space stations and new space industries become a reality, demand is expected to increase for advanced in-space manufacturing and biotech facilities that generate new materials and breakthrough medical treatments manufactured in microgravity.
Added
Our strategy also includes strategic acquisitions to complement and expand the Company’s technologies and core space infrastructure offerings. Our scale, reputation for quality and relationships allow us to be agile and innovative in our approach to pursuing growth through business models, partnerships and acquisitions.
Removed
Redwire’s acquisition of Space NV comes as space budgets in Europe increase, with the European Space Agency receiving a 17% increase in budget compared to 2019. Across the globe, we believe many nations see space as a unique opportunity to build national prestige and expand their economies.
Added
Products and Solutions Avionics and Sensors Satellites that go into orbit generally require sensors and avionics systems and Redwire has developed advanced capabilities in these critical subsectors of the space supply chain with more than 50 years of heritage in manufacturing space-qualified sensors. We provide a variety of space-qualified sensors and advanced avionics systems.
Removed
In addition to the U.S. and Europe, Saudi Arabia, the United Arab Emirates, Hungary, Poland, and India, are making notable investments in space technology, thereby significantly increasing the total addressable market for Redwire. We believe the space economy is at an inflection point.
Added
We specialize in core avionics, such as scalable power distribution and on-board computing capabilities, with an emphasis on reliability, quality, and radiation hardness. These specialized avionics and sensors can be applied across multiple space environments, including Low Earth Orbit (“LEO”), Geostationary Orbit (“GEO”), Cis-lunar and deep space missions.
Removed
The reduction of launch costs over the last decade has eliminated the single largest economic barrier to entry for the expanded utilization of space, and the increasing cadence of launches provides more flexible, reliable access.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

195 edited+70 added−132 removed221 unchanged
Biggest changeRisk Factors Summary Some of the principal risks that may impact our business and results of operations are listed below: Business and Industry Risks • Risks associated with the continued economic uncertainty, including high inflation, supply chain challenges, labor shortages, high interest rates, foreign currency exchange volatility, concerns of economic slowdown or recession and reduced spending or suspension of investment in new or enhanced projects; • the failure of financial institutions or transactional counterparties could adversely affect our current and projected business operations and our financial condition and results of operations; • our limited operating history makes it difficult to evaluate our future prospects and the risks and challenges we may encounter; • if we are unable to successfully integrate our recently completed and future acquisitions or successfully select, execute or integrate future acquisitions into the business, our operations and financial condition could be materially and adversely affected; • our ability to grow our business depends on the successful development and continued refinement of many of our proprietary technologies, products, and service offerings; • competition with existing or new companies could cause downward pressure on prices, fewer customer orders, reduced margins, the inability to take advantage of new business opportunities, and the loss of market share; • our projections of future financial results are based on a number of assumptions by our management, some or all of which may prove to be incorrect, and actual results may differ materially and adversely from such projections; • adverse publicity stemming from any incident involving Redwire or our competitors could have a material adverse effect on our business, financial condition and results of operations; • unsatisfactory performance of our products and services could have a material adverse effect on our business, financial condition and results of operations; • the market for in-space infrastructure services has not been established with precision, is still emerging and may not achieve the growth potential that we expect or may grow more slowly than expected; • we may in the future invest significant resources in developing new offerings and exploring the application of our technologies for other uses and those opportunities may never materialize; • we may not be able to convert our orders in backlog into revenue; • a portion of our business model is related to the in-space manufacture and robotic assembly of space structures, a technology that is still in development and has not been fully validated through in-space deployment and testing; • our reliance on third-party launch vehicles to launch our spacecraft and customer payloads into space; • our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide; Government Contract Risks • the U.S. government’s budget deficit and the national debt, as well as any inability of the U.S. government to complete its budget process for any government fiscal year and consequently having to shut down or operate on funding levels equivalent to its prior fiscal year pursuant to a “continuing resolution,” could have an adverse impact on our business, financial condition, results of operations and cash flows; Page 15 • we depend significantly on U.S. government contracts, which often are only partially funded, subject to immediate termination, and heavily regulated and audited; Regulatory Risks • we are subject to stringent U.S. economic sanctions, and trade control laws and regulations; • we have government customers, which subjects us to risks including early termination, audits, investigations, sanctions and penalties; • if we fail to adequately protect our intellectual property rights, our competitive position could be impaired and our intellectual property applications for registration may not be issued or be registered; • protecting and defending against intellectual property claims could have a material adverse effect on our business; Risks Related to Financing and the Ownership of our Securities • our level of indebtedness and the potential need for substantial funding to finance our operations, which may not be available when we need it, on acceptable terms or at all; • we may require substantial additional funding to finance our operations, but adequate additional financing may not be available when we need it, on acceptable terms or at all; • the reduced relative voting power of holders of our common stock and diluted the ownership of holders of our capital stock as a result of the issuance and sale of shares of our Series A Convertible Preferred Stock; • AE Industrial Partners and Bain Capital have significant influence over us, which could limit other investors’ ability to influence the outcome of key transactions; • provisions in the Certificate of Designation related to our Series A Convertible Preferred Stock may delay or prevent our acquisition by a third party, which could also reduce the market price of our capital stock; • our Series A Convertible Preferred Stock has rights, preferences and privileges that are not held by, and are preferential to, the rights of holders of our other outstanding capital stock; • there may be sales of a substantial amount of our common stock by our current stockholders, and these sales could cause the price of our common stock to fall; • the trading price of our common stock and warrants is and may continue to be volatile; • risks related to the actions of short sellers of our common stock; Risks Related to Being a Public Company • our management team has limited experience managing a public company; and • if we were to identify additional material weaknesses or other deficiencies, or otherwise fail to maintain effective internal control over financial reporting, we may not be able to accurately and timely report our financial results, in which case our business may be harmed and investors may lose confidence in the accuracy and completeness of our financial reports.
Biggest changeRisk Factors Summary Some of the principal risks that may impact our business and results of operations are listed below: Business and Industry Risks • risks associated with continued economic uncertainty, including high inflation, supply chain challenges, labor shortages, high interest rates, foreign currency exchange volatility, concerns of economic slowdown or recession and reduced spending or suspension of investment in new or enhanced projects; • the failure of financial institutions or transactional counterparties could adversely affect our current and projected business operations and our financial condition and results of operations; Page 10 • our limited operating history in an evolving industry and history of losses to date makes it difficult to evaluate our future prospects and the risks and challenges we may encounter; • if we are unable to successfully integrate our recently completed and future acquisitions or successfully select, execute or integrate future acquisitions into the business, our operations and financial condition could be materially and adversely affected; • our ability to grow our business depends on the successful development and continued refinement of many of our proprietary technologies, products, and service offerings; • competition with existing or new companies could cause downward pressure on prices, fewer customer orders, reduced margins, the inability to take advantage of new business opportunities, and the loss of market share; • a limited number of customers make up a high percentage of our revenue; • matters relating to or arising from our Audit Committee investigation, including regulatory investigations and proceedings, litigation matters, and potential additional expenses, may adversely affect our business and results of operations; • natural disasters, geopolitical conflicts, or other natural or man-made catastrophic events could disrupt and impact our business; • adverse publicity stemming from any incident involving Redwire or our competitors could have a material adverse effect on our business, financial condition and results of operations; • our business involves significant risks and uncertainties that may not be covered by insurance or indemnity; • our business could be seriously harmed if we fail to respond to commercial industry cycles in terms of our cost structure, manufacturing capacity, and/or personnel needs; • any delays in the development, design, engineering and manufacturing of our core offerings may adversely impact our business, financial condition and results of operations; • unsatisfactory performance of our core offerings resulting from challenges in the space environment, extreme space weather events or otherwise could have a material adverse effect on our business, financial condition and results of operations; • our results of operations and cash flows are substantially affected by our mix of fixed-price, cost-plus and time-and-material type contracts; • our cash flow and profitability could be reduced if expenditures are incurred prior to the final receipt of a contract; • we may in the future invest significant resources in developing new offerings and exploring the application of our technologies for other uses and those opportunities may never materialize; • we may not be able to convert our orders in backlog into revenue; • we may use artificial intelligence in our business, and challenges with properly managing its use could result in reputational harm, competitive harm, and legal liability, and adversely affect our results of operations; • our reliance on third-party launch vehicles to launch our spacecraft and customer payloads into space; • we may experience a total loss of our technology and products and our customers’ payloads, if there is an accident on launch or during the journey into space, and any insurance we may have may not be adequate to cover our loss; • our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide; • cyber-attacks and other security threats and disruptions could have a material adverse effect on our business; • if we are not successful in attracting or retaining highly qualified personnel, we may not be able to successfully implement our business strategy; • our business, financial condition and results of operations are subject to risks resulting from broader geographic operations; • our net earnings could be materially affected by an impairment of goodwill; • our pension funding and costs are dependent on several economic assumptions which, if changed, may cause our future results of operations and cash flows to fluctuate significantly over time; • our ability to use net operating loss carryforwards and certain other tax attributes may be limited; Government Contract Risks • the U.S. government’s budget deficit and the national debt, as well as any inability of the U.S. government to complete its budget process for any government fiscal year and consequently having to shut down or operate on funding levels equivalent to its prior fiscal year pursuant to a “continuing resolution,” could have an adverse impact on our business, financial condition, results of operations and cash flows; • we depend significantly on U.S. government contracts, which often are only partially funded, subject to immediate termination, and heavily regulated and audited; • we are subject to the requirements of the National Industrial Security Program Operating Manual (“NISPOM”) for our facility security clearance, which is a prerequisite to our ability to perform on classified contracts for the U.S. government; Page 11 Regulatory Risks • we are subject to stringent U.S. economic sanctions, and trade control laws and regulations; • if we fail to adequately protect our intellectual property rights, our competitive position could be impaired and our intellectual property applications for registration may not be issued or be registered; • protecting and defending against intellectual property claims could have a material adverse effect on our business; Risks Related to Financing and the Ownership of our Securities • our level of indebtedness and the potential need for substantial funding to finance our operations, which may not be available when we need it, on acceptable terms or at all; • we may require substantial additional funding to finance our operations, but adequate additional financing may not be available when we need it, on acceptable terms or at all; • the reduced relative voting power of holders of our common stock and diluted the ownership of holders of our capital stock as a result of the issuance and sale of shares of our Series A Convertible Preferred Stock; • AE Industrial Partners and Bain Capital have significant influence over us, which could limit other investors’ ability to influence the outcome of key transactions; • provisions in the Certificate of Designation related to our Series A Convertible Preferred Stock may delay or prevent our acquisition by a third party, which could also reduce the market price of our capital stock; • our Series A Convertible Preferred Stock has rights, preferences and privileges that are not held by, and are preferential to, the rights of holders of our other outstanding capital stock; • there may be sales of a substantial amount of our common stock by our current shareholders and these sales could cause the price of our common stock to fall; • it is not possible to predict the actual number of shares we will sell under the Purchase Agreement to B.
Acquisitions could result in the use of substantial amounts of cash, potentially dilutive issuances of equity securities and exposure to potential unknown liabilities of the acquired business. Moreover, the costs of identifying and consummating acquisitions may be significant.
Acquisitions could result in the use of substantial amounts of cash, potentially dilutive issuances of equity securities and potential exposure to unknown liabilities of the acquired business. Moreover, the costs of identifying and consummating acquisitions may be significant.
If we are unable to successfully remediate our existing or any future material weaknesses in our internal control over financial reporting, the accuracy and timing of our financial reporting may be adversely affected; investors may lose confidence in our financial reporting; we could become subject to litigation or investigations by the New York Stock Exchange (“NYSE”), the SEC or other regulatory authorities.
If we are unable to successfully remediate existing or any future material weaknesses in our internal control over financial reporting, the accuracy and timing of our financial reporting may be adversely affected, investors may lose confidence in our financial reporting, and/or we could become subject to litigation or investigations by the New York Stock Exchange (“NYSE”), the SEC or other regulatory authorities.
Prior to obtaining the approvals described by the foregoing, subject to certain exceptions, we must not: (1) create or authorize the creation of (including by increasing the authorized amount of) or issue any senior securities or parity securities or any securities convertible into or exercisable or exchangeable for any senior security or parity security, or amend or alter the Company’s Certificate of Incorporation to increase the number of authorized shares of Series A Convertible Preferred Stock, (2) reclassify or modify any existing class or series of equity securities in a manner that would result in such class or series of equity securities being senior to or on parity with the Series A Convertible Preferred Stock, (3) issue any shares of Series A Convertible Preferred Stock in excess of 10% of the number of shares of Series A Convertible Preferred Stock initially purchased by Bain Capital and AEI in the aggregate, (4) decrease the number of authorized shares of Series A Convertible Preferred Stock, (5) alter, change or amend the terms, rights, preferences or privileges of the Series A Convertible Preferred Stock in any manner, (6) amend, waive, alter or repeal any provision of the Company’s Certificate of Incorporation, Bylaws or comparable organizational documents in a manner that would adversely affect the Series A Convertible Page 39 Preferred Stock or the rights, preferences or privileges of the Series A Convertible Preferred Stock, (7) declare or pay a dividend or distribute cash or property through dividends or other distributions in respect of any junior securities, (8) redeem, purchase or otherwise acquire any junior securities, (9) create or hold any of the Company’s capital stock in any subsidiary that is not a wholly owned subsidiary or dispose of any subsidiary capital stock or all or substantially all of any subsidiary’s assets, or (10) commence any voluntary liquidation, bankruptcy, dissolution, recapitalization, reorganization or assignment to the Company’s creditors.
Prior to obtaining the approvals described by the foregoing, subject to certain exceptions, we must not: (1) create or authorize the creation of (including by increasing the authorized amount of) or issue any senior securities or parity securities or any securities convertible into or exercisable or exchangeable for any senior security or parity security, or amend or alter the Company’s Certificate of Incorporation to increase the number of authorized shares of Series A Convertible Preferred Stock, (2) reclassify or modify any existing class or series of equity securities in a manner that would result in such class or series of equity securities being senior to or on parity with the Series A Convertible Preferred Stock, (3) issue any shares of Series A Convertible Preferred Stock in excess of 10% of the number of shares of Series A Convertible Preferred Stock initially purchased by Bain Capital and AEI in the aggregate, (4) decrease the number of authorized shares of Series A Convertible Preferred Stock, (5) alter, change or amend the terms, rights, preferences or privileges of the Series A Convertible Preferred Stock in any manner, (6) amend, waive, alter or repeal any provision of the Company’s Certificate of Incorporation, Bylaws or comparable organizational documents in a manner that would adversely affect the Series A Convertible Preferred Stock or the rights, preferences or privileges of the Series A Convertible Preferred Stock, (7) declare or pay a dividend or distribute cash or property through dividends or other distributions in respect of any junior securities, (8) redeem, purchase or otherwise acquire any junior securities, (9) create or hold any of the Company’s capital stock in any subsidiary that is not a wholly-owned subsidiary or dispose of any subsidiary capital stock or all or substantially all of any subsidiary’s assets, or (10) commence any voluntary liquidation, bankruptcy, dissolution, recapitalization, reorganization or assignment to the Company’s creditors.
Significant fluctuations in our operating results for a particular quarter could cause us to fall out of compliance with the financial covenants related to our debt, which if not waived, could restrict our access to capital and cause us to take extreme measures to pay down the debt, if any, under the Adams Street Credit Agreement.
Additionally, significant fluctuations in our operating results for a particular quarter could cause us to fall out of compliance with the financial covenants related to our debt, which if not waived, could restrict our access to capital and cause us to take extreme measures to pay down the debt, if any, under the Adams Street Credit Agreement.
This is often referred to as a “short squeeze.” A short squeeze could lead to volatile price movements in shares of our common stock that are unrelated or disproportionate to our operating performance or prospects and, once investors purchase the shares of our common stock necessary to cover their short positions, the price of our common stock may rapidly decline.
This is often referred to as a “short squeeze.” A “short squeeze” could lead to volatile price movements in shares of our common stock that are unrelated or disproportionate to our operating performance or prospects and, once investors purchase the shares of our common stock necessary to cover their short positions, the price of our common stock may rapidly decline.
Reasons for this include, but are not limited to, the following: • political and economic instability; • governments’ restrictive trade policies; • the imposition or rescission of duties, taxes or government royalties; • exchange rate risks; • exposure to varying legal standards, including data privacy, security and intellectual property protection in other jurisdictions; • difficulties in obtaining required regulatory authorizations; • local domestic ownership requirements; • requirements that certain operational activities be performed in-country; • changing and conflicting national and local regulatory requirements; and Page 27 • the geographic, language and cultural differences between personnel in different areas of the world.
Reasons for this include, but are not limited to, the following: • political and economic instability; • governments’ restrictive trade policies; • the imposition or rescission of duties, taxes or government royalties; • exchange rate risks; • exposure to varying legal standards, including data privacy, security and intellectual property protection in other jurisdictions; • difficulties in obtaining required regulatory authorizations; • local domestic ownership requirements; • requirements that certain operational activities be performed in-country; • changing and conflicting national and local regulatory requirements; and • the geographic, language and cultural differences between personnel in different areas of the world.
The Company is highly dependent on its full senior management team and on our ability to attract, motivate, develop and retain a sufficient number of other skilled personnel, manufacturing and quality assurance, engineering, design, finance, marketing, sales and support personnel.
The Company is highly dependent on its senior management team and on our ability to attract, motivate, develop and retain a sufficient number of other skilled personnel, manufacturing and quality assurance, engineering, design, finance, marketing, sales and support personnel.
Sales of substantial amounts of our common stock in the public market, including or the perception that such sales will occur, could adversely affect the market price of our common stock and make it difficult for us to raise funds through securities offerings in the future.
Sales of substantial amounts of our common stock in the public market or the perception that such sales will occur, could adversely affect the market price of our common stock and make it difficult for us to raise funds through securities offerings in the future.
The tightening of credit in financial markets outside of the U.S. could adversely affect the ability of our customers and suppliers to obtain financing and could result in a decrease in or cancellation of orders for our products and services or impact the ability of our customers to make payments.
The tightening of credit in financial markets inside and outside of the U.S. could adversely affect the ability of our customers and suppliers to obtain financing and could result in a decrease in or cancellation of orders for our products and services or impact the ability of our customers to make payments.
Our operating results have fluctuated and may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide. Our quarterly and annual operating results have fluctuated and may fluctuate significantly, which makes it difficult for us to predict our future operating results.
Our operating results may fluctuate significantly, which makes our future operating results difficult to predict and could cause our operating results to fall below expectations or any guidance we may provide. Our quarterly and annual revenue and operating results have fluctuated and may fluctuate significantly, which makes it difficult for us to predict our future operating results.
In the event of any voluntary or involuntary liquidation, dissolution or winding up of our affairs, the holders of our Series A Convertible Preferred Stock are entitled to receive certain payments (i) prior to any amounts paid to holders of our common stock and each other class or series of our capital stock now existing or hereafter authorized, the terms of which do not expressly provide that such class or series ranks either senior to, or on parity with, the Series A Convertible Preferred Stock , and (ii) on parity with each other class or series of our capital stock established in the future, the terms of which expressly provide that such class or series ranks on a parity basis with the Series A Convertible Preferred Stock.
In the event of any voluntary or involuntary liquidation, dissolution or winding up of our affairs, the holders of our Series A Convertible Preferred Stock are entitled to receive certain payments (i) prior to any amounts paid to holders of our common stock and each other class or series of our capital stock now existing or hereafter authorized, the terms of which do not expressly provide that Page 32 such class or series ranks either senior to, or on parity with, the Series A Convertible Preferred Stock, and (ii) on parity with each other class or series of our capital stock established in the future, the terms of which expressly provide that such class or series ranks on a parity basis with the Series A Convertible Preferred Stock.
Additionally, these material weaknesses could result in misstatements of substantially all accounts and disclosures that would result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.
These material weaknesses could result in misstatements of substantially all accounts and disclosures that could result in a material misstatement to the annual or interim consolidated financial statements that would not be prevented or detected.
In addition, problems and delays in development or delivery as a result of issues with respect to design, technology, licensing and patent rights, labor, learning curve assumptions or materials and components could prevent us from achieving contractual requirements. In many circumstances, we may receive indemnification from the U.S. government. We generally do not receive indemnification from foreign governments.
In addition, problems and delays in development or delivery as a result of issues with respect to design, technology, licensing and patent Page 16 rights, labor, learning curve assumptions or materials and components could prevent us from achieving contractual requirements. In many circumstances, we may receive indemnification from the U.S. government. We generally do not receive indemnification from foreign governments.
The GDPR, DPA 18, and other similar regulations require companies to give specific types of notice and informed consent is required for certain actions, and the GDPR also imposes additional conditions in order to satisfy such consent, such as bundled consents. We cannot determine the impact any future laws, regulations and standards may have on our business.
The GDPR, DPA 18, and other similar regulations require companies to give specific types of notice and informed consent is required for certain actions, and the GDPR also imposes additional conditions in order to satisfy such consent, such as bundled consents. Page 28 We cannot determine the impact any future laws, regulations and standards may have on our business.
Additionally, as long as AEI and Bain Capital continue to beneficially own at least 25% of the aggregate number of shares of Series A Convertible Preferred Stock originally issued to each of them, we may not undertake certain actions without the prior approval of each of Bain Capital and AEI, and in the event that Bain Capital or AEI does not continue to hold 25% of the aggregate number of shares of Series A Convertible Preferred Stock originally issued to them, we may not undertake certain actions without the prior approval of the holders of a majority of the issued and outstanding shares of Series A Convertible Preferred Stock in the aggregate.
Page 31 Additionally, as long as AEI and Bain Capital continue to beneficially own at least 25% of the aggregate number of shares of Series A Convertible Preferred Stock originally issued to each of them, we may not undertake certain actions without the prior approval of each of Bain Capital and AEI, and in the event that Bain Capital or AEI does not continue to hold 25% of the aggregate number of shares of Series A Convertible Preferred Stock originally issued to them, we may not undertake certain actions without the prior approval of the holders of a majority of the issued and outstanding shares of Series A Convertible Preferred Stock in the aggregate.
Because of this reliance, errors, defects, or other performance problems in our products could result in significant financial and other damage to our customers. Our customers could attempt to recover those losses by pursuing products liability claims against us which, even if unsuccessful, would likely be time-consuming and costly to defend and could adversely affect our reputation.
Because of this reliance, errors, defects, or other performance problems in our core offerings could result in significant financial and other damage to our customers. Our customers could attempt to recover those losses by pursuing products liability claims against us which, even if unsuccessful, would likely be time-consuming and costly to defend and could adversely affect our reputation.
If our government or prime contractor customer’s requirements should change or if the government or the prime contractor should direct the anticipated procurement to another contractor, or if the anticipated contract award does not materialize, or if the equipment or materials become obsolete or require modification before we are under contract for the procurement, our investment in the equipment or materials might be at risk if we cannot efficiently resell them.
If our government or prime contractor customer’s requirements should change or if the government or the prime contractor should direct the anticipated procurement to another contractor, or if the anticipated contract award does not materialize, or if the equipment or materials become obsolete or require modification before we are under contract for the procurement, our Page 18 investment in the equipment or materials might be at risk if we cannot efficiently resell them.
Additionally, our markets are facing increasing industry consolidation, resulting in larger competitors who have more market share putting more downward pressure on prices and offering a more robust portfolio of products and services. We are subject to competition based upon product design, performance, pricing, quality, and services.
Page 14 Additionally, our markets are facing increasing industry consolidation, resulting in larger competitors who have more market share putting more downward pressure on prices and offering a more robust portfolio of products and services. We are subject to competition based upon product design, performance, pricing, quality, and services.
Moreover, changes in law, the imposition of new or additional regulations or the enactment of any new or more stringent legislation that impacts our business could require us to change the way we operate and could have a material adverse effect on our sales, profitability, cash flows and financial condition.
Page 27 Moreover, changes in law, the imposition of new or additional regulations or the enactment of any new or more stringent legislation that impacts our business could require us to change the way we operate and could have a material adverse effect on our sales, profitability, cash flows and financial condition.
The price of our common stock may be adversely affected due to, among other things, our financial results and market conditions. There can be no assurance that we will continue to remain in compliance with this standard or that we will remain in compliance with any of the other applicable continued listing standards of the NYSE.
The price of our common stock may be adversely affected due to, among other things, our financial results and market conditions. There can be no assurance that we will continue to Page 34 remain in compliance with this standard or that we will remain in compliance with any of the other applicable continued listing standards of the NYSE.
In addition, we may have potential write-offs of acquired assets and/or an impairment of any goodwill recorded as a result of such acquisitions or participations. Furthermore, the integration of any acquisition may divert management’s time and resources from our core business and disrupt our operations or may result in conflicts with our business.
In addition, we may have potential write-offs of Page 13 acquired assets and/or an impairment of any goodwill recorded as a result of such acquisitions or participations. Furthermore, the integration of any acquisition may divert management’s time and resources from our core business and disrupt our operations or may result in conflicts with our business.
We are required at least annually to test the recoverability of goodwill or more frequently when events and circumstances indicate that it is more likely than not that the fair value of a reporting unit is less than its carrying value. The recoverability test of goodwill is based on the current fair value of our identified reporting units.
We are required at least annually to test the recoverability of goodwill or more frequently when events and circumstances indicate that it is more likely Page 23 than not that the fair value of a reporting unit is less than its carrying value. The recoverability test of goodwill is based on the current fair value of our identified reporting units.
Failure to comply with the NISPOM or other security requirements may subject us to civil or criminal penalties, loss of Page 29 access to sensitive information, loss of a U.S. Government contract or subcontract, or potentially debarment as a government contractor. Therefore, any failure to comply with U.S. Government security protocols could adversely affect our ability to operate.
Failure to comply with the NISPOM or other security requirements may subject us to civil or criminal penalties, loss of access to sensitive information, loss of a U.S. government contract or subcontract, or potentially debarment as a government contractor. Therefore, any failure to comply with U.S. government security protocols could adversely affect our ability to operate.
Any issuance and sale by us under the Purchase Agreement of a substantial amount of shares of common stock could cause additional substantial dilution to our stockholders. Our inability to access a portion or the full amount available under the Purchase Agreement, in the absence of any other financing sources, could have a material adverse effect on our business.
Any issuance and sale by us under the Purchase Agreement of a substantial amount of shares of common stock could cause additional substantial dilution to our shareholders. Our inability to access a portion or the full amount available under the Purchase Agreement, in the absence of any other financing sources, could have a material adverse effect on our business.
During down cycles in our industry, the financial results of our customers may be negatively impacted, which could result not only in Page 21 a decrease in orders but also a weakening of their financial condition that could impair our ability to recognize revenue or to collect on outstanding receivables.
During down cycles in our industry, the financial results of our customers may be negatively impacted, which could result not only in a decrease in orders but also a weakening of their financial condition that could impair our ability to recognize revenue or to collect on outstanding receivables.
This could reduce the remaining amount of our assets, if any, available to distribute to holders of our capital stock. Page 40 Our obligations to the holders of Series A Convertible Preferred Stock could limit our ability to obtain additional financing or increase our borrowing costs, which could have an adverse effect on our financial condition.
This could reduce the remaining amount of our assets, if any, available to distribute to holders of our capital stock. Our obligations to the holders of Series A Convertible Preferred Stock could limit our ability to obtain additional financing or increase our borrowing costs, which could have an adverse effect on our financial condition.
Riley more than 12,531,903 shares of common stock, which number of shares is equal to 19.99% of the shares of the common stock outstanding immediately prior to the execution of the Purchase Agreement, without stockholder approval. As a result, if it becomes necessary for us to issue and sell to B.
Riley more than 12,531,903 shares of common stock, which number of shares is equal to 19.99% of the shares of the common stock outstanding immediately prior to the execution of the Purchase Agreement, without shareholder approval. As a result, if it becomes necessary for us to issue and sell to B.
Riley an aggregate number of shares that would exceed the limit of 12,531,903 shares (excluding certain issuances), then before we could issue any shares of common stock in excess of the cap share issuance limit under the Purchase Agreement, we would also need to obtain the requisite stockholder approval.
Riley an aggregate number of shares that would exceed the limit of 12,531,903 shares (excluding certain issuances), then before we could issue any shares of common stock in excess of the cap share issuance limit under the Purchase Agreement, we would also need to obtain the requisite shareholder approval.
Additionally, the possibility exists that our competitors might develop new technology or offerings that might cause our existing technology and offerings to become obsolete.
Additionally, the possibility exists that our competitors might develop new technology or offerings that might cause our existing technology and core offerings to become obsolete.
There can be no assurance that consumer demand for such initiatives will exist or be sustained at the levels that we anticipate, or that any of these Page 23 initiatives will gain sufficient traction or market acceptance to generate sufficient revenue to offset any new expenses or liabilities associated with these new investments.
There can be no assurance that consumer demand for such initiatives will exist or be sustained at the levels that we anticipate, or that any of these initiatives will gain sufficient traction or market acceptance to generate sufficient revenue to offset any new expenses or liabilities associated with these new investments.
If for some reason our security clearance is invalidated or terminated, we may not be able to continue to perform on classified contracts and would not be able to enter into new classified contracts, which could materially adversely affect our business, financial condition, and results of operations.
If for some reason our security clearance is invalidated or terminated, we may not be able to continue to perform on Page 24 classified contracts and would not be able to enter into new classified contracts, which could materially adversely affect our business, financial condition, and results of operations.
Page 22 Our cash flow and profitability could be reduced if expenditures are incurred prior to the final receipt of a contract. We provide various professional services, specialized products, and sometimes procure equipment and materials on behalf of our customers under various contractual arrangements.
Our cash flow and profitability could be reduced if expenditures are incurred prior to the final receipt of a contract. We provide various professional services, specialized products, and sometimes procure equipment and materials on behalf of our customers under various contractual arrangements.
From time to time, there are components for which there may be only one supplier, which may be unable to meet our Page 32 needs. Each of these subcontractor and supplier risks could have a material adverse effect on our business, financial condition, results of operations and cash flows.
From time to time, there are components for which there may be only one supplier, which may be unable to meet our needs. Each of these subcontractor and supplier risks could have a material adverse effect on our business, financial condition, results of operations and cash flows.
Laws and regulations at the foreign, federal, state and local levels frequently change, especially in relation to new and emerging industries, and we cannot always reasonably predict the impact from, or the ultimate cost of compliance with, Page 33 current or future regulatory or administrative changes.
Laws and regulations at the foreign, federal, state and local levels frequently change, especially in relation to new and emerging industries, and we cannot always reasonably predict the impact from, or the ultimate cost of compliance with, current or future regulatory or administrative changes.
Adverse publicity stemming from any incident or perceived risk involving us, our customers, users of our products and services, other operators in the space sector or our competitors could have a material adverse effect on our stock price, business, financial condition and results of operations.
Adverse publicity stemming from any incident or perceived risk involving us, our customers, users of our products and services, other operators in the space sector or our competitors could have a material adverse effect on our business, financial condition and results of operations.
If such incident should occur, we will likely experience a total loss of our systems, products, technologies and services and our customers’ payloads. The total or partial loss of one or more of our products or customer payloads could have a material adverse effect on our results of operations and financial condition.
If such incidents should occur, we will likely experience a total loss of our systems, products, technologies and services and our customers’ payloads. The total or partial loss of one or more of our products or customer payloads could have a material adverse effect on our results of operations and financial condition.
These preferential rights could also result in divergent interests between the holders of shares of our Series A Convertible Preferred Stock and other holders of our capital stock. There may be sales of a substantial amount of our common stock by our current stockholders, and these sales could cause the price of our common stock to fall.
These preferential rights could also result in divergent interests between the holders of shares of our Series A Convertible Preferred Stock and other holders of our capital stock. There may be sales of a substantial amount of our common stock by our current shareholders, and these sales could cause the price of our common stock to fall.
We may issue additional shares of common stock or other equity securities in the future in connection with, among other things, future acquisitions, repayment of outstanding indebtedness or grants under the Redwire Corporation 2021 Omnibus Incentive Plan without stockholder approval in a number of circumstances.
We may issue additional shares of common stock or other equity securities in the future in connection with, among other things, future acquisitions, repayment of outstanding indebtedness or grants under the Redwire Corporation 2021 Omnibus Incentive Plan without shareholder approval in a number of circumstances.
Many of our customers and potential customers have the capacity to design and internally manufacture products that are similar to our products. We face competition from research and product development groups and the manufacturing operations of current and potential customers, who continually evaluate the benefits of internal research, product development, and manufacturing versus outsourcing.
Many of our customers and potential customers have the capacity to design and internally manufacture products that are similar to our core offerings. We face competition from research and product development groups and the manufacturing operations of current and potential customers, who continually evaluate the benefits of internal research, product development, and manufacturing versus outsourcing.
If we are unable to compete successfully, our business, financial condition and results of operations would be adversely affected. Page 19 A limited number of customers make up a high percentage of our revenue. If we cannot maintain these relationships, our future operating results will be adversely affected.
If we are unable to compete successfully, our business, financial condition and results of operations would be adversely affected. A limited number of customers make up a high percentage of our revenue. If we cannot maintain these relationships, our future operating results will be adversely affected.
Broad market and industry factors may depress the market price of our common stock irrespective of our operating performance. The stock market in general and NYSE have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected.
Page 35 Broad market and industry factors may depress the market price of our common stock irrespective of our operating performance. The stock market in general and NYSE have experienced price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the particular companies affected.
Due to the design complexity of our products, we may, in the future, experience delays in completing the development and introduction of new products. Any delays could result in increased costs of development or deflect resources from other projects.
Due to the design complexity of our offerings, we may, in the future, experience delays in completing the development and introduction of new offerings. Any delays could result in increased costs of development or deflect resources from other projects.
Existing coverage may be canceled while we remain exposed to the risk and it is not possible to obtain insurance to protect against all operational risks, natural hazards and liabilities. We have historically insured certain of our products to the extent that insurance was available on acceptable premiums and other terms.
Existing coverage may be canceled while we remain exposed to the risk and it is not possible to obtain insurance to protect against all operational risks, natural hazards and liabilities. We have historically insured certain of our core offerings to the extent that insurance was available on acceptable premiums and other terms.
Our disaster recovery plan or those of our third-party providers may be inadequate, and our business interruption insurance may not be sufficient to compensate us for the losses that could occur.
Our disaster recovery plan or those of our third- Page 22 party providers may be inadequate, and our business interruption insurance may not be sufficient to compensate us for the losses that could occur.
Page 31 Our U.S. government business also is subject to specific procurement regulations and a variety of socioeconomic and other requirements. These requirements, although customary in U.S. government contracts, increase our performance and compliance costs.
Our U.S. government business also is subject to specific procurement regulations and a variety of socioeconomic and other requirements. These requirements, although customary in U.S. government contracts, increase our performance and compliance costs.
Page 36 Certain U.S. state tax authorities may assert that we have a state nexus and seek to impose state and local income taxes which could harm our results of operations.
Certain U.S. state tax authorities may assert that we have a state nexus and seek to impose state and local income taxes, which could harm our results of operations.
Riley may cause the public trading price of our common stock to decrease. Because the purchase price per share to be paid by B. Riley for the shares of common stock that we may elect to sell to B.
Riley may cause the public trading price of our common stock to decrease. Page 33 Because the purchase price per share to be paid by B. Riley for the shares of common stock that we may elect to sell to B.
In addition, this insurance will not protect us against all losses to our products due to specified exclusions, deductibles and material change limitations and it may be difficult to insure against certain risks, including on orbit performance of an overall system or portion of such a system.
In addition, this insurance will not protect us against all losses to our core offerings due to specified exclusions, deductibles and material change limitations and it may be difficult to insure against certain risks, including on-orbit performance of an overall system or portion of such a system.
Our defense prime contractor customers could decide to pursue one or more of our product development areas as a core competency and insource that technology development and production rather than purchase that capability from us as a supplier. This competition could result in fewer customer orders and a loss of market share.
Our customers could decide to pursue one or more of our product development areas as a core competency and insource that technology development and production rather than purchase that capability from us as a supplier. This competition could result in fewer customer orders and a loss of market share.
We believe our ability to compete successfully in designing, engineering and manufacturing our products and services at significantly reduced cost to customers does and will depend on a number of factors, which may change in the future due to increased competition, our ability to meet our customers’ needs and the frequency and availability of our offerings.
We believe our ability to compete successfully in designing, engineering and manufacturing our core offerings at significantly reduced cost to customers does and will depend on a number of factors, which may change in the future due to increased competition, our ability to meet our customers’ needs and the frequency and availability of our offerings.
Page 18 We believe that, in order to remain competitive in the future, we will need to continue to invest significant financial resources to develop new offerings and technologies or to adapt or modify our existing offerings and technologies, including through internal research and development, acquisitions and joint ventures or other teaming arrangements.
We believe that, in order to remain competitive in the future, we will need to continue to invest significant financial resources to develop new offerings and technologies or to adapt or modify our existing core offerings and technologies, including through internal research and development, acquisitions and joint ventures or other teaming arrangements.
We are also a party to a Registration Rights Agreement, dated April 14, 2022, by and between us and B. Riley Principal Capital, LLC (the “B. Riley Registration Rights Agreement”), pursuant to which B. Riley Principal Capital, LLC is entitled to demand that we register the resale of its securities subject to certain minimum requirements.
We are also a party to a Registration Rights Agreement, dated April 14, 2022, by and between us and B. Riley (the “B. Riley Registration Rights Agreement”), pursuant to which B. Riley is entitled to demand that we register the resale of its securities subject to certain minimum requirements.
Please refer to Note T of the accompanying notes to the consolidated financial statements for additional information. If general market conditions continue to deteriorate in other portions of our business, we could experience a significant decline in the fair value of our other reporting units.
Please refer to Note T – Impairment Expense of the accompanying notes to the consolidated financial statements for additional information. If general market conditions deteriorate in other portions of our business, we could experience a significant decline in the fair value of our other reporting units.
If we are unable to repair these problems in a timely manner, we may experience a loss of or delay in revenue and significant damage to our reputation and business prospects. Many of our customers rely upon our products for mission-critical applications.
If we are unable to repair these problems in a timely manner, we may experience a loss of or delay in revenue and significant damage to our reputation and business prospects. Many of our customers rely upon our core offerings for mission-critical applications.
If we encounter difficulties in scaling our delivery or servicing capabilities, if we fail to develop and successfully commercialize our products and services, if we fail to develop such technologies before our competitors, or if such technologies fail to perform as expected, are inferior to those of our competitors or are perceived to offer less mission assurance than those of our competitors, our business, financial condition and results of operations could be materially and adversely impacted.
If we encounter difficulties in scaling our delivery or servicing capabilities, if we fail to develop and successfully commercialize our core offerings, if we fail to develop such technologies before our competitors, or if such technologies fail to perform as expected, are inferior to those of our competitors or are perceived to offer less mission assurance than those of our competitors, our business, financial condition and results of operations could be materially and adversely impacted.
In addition, we are continually learning, and as our engineering and manufacturing expertise and efficiency increases, we aim to leverage this learning to be able to manufacture our products and equipment using less of our currently installed equipment, which could render our existing inventory obsolete.
In addition, we are continually learning, and as our engineering and manufacturing expertise and efficiency increases, we aim to leverage this learning to be able to manufacture our core offerings and equipment using less of our currently installed equipment, which could render our existing inventory obsolete.
Stockholders who are party to the Investor Rights Agreement also have certain demand and “piggyback” registration rights with respect to the securities held by such parties.
Shareholders who are party to the Investor Rights Agreement also have certain demand and “piggyback” registration rights with respect to the securities held by such parties.
If our customers reduce their investments, that may impact our ability to bring new products and services to market and/or increase the investment that is necessary for the Company to make in order to remain competitive, either of which could have a material adverse effect on our business, results of operations and financial condition.
If our customers reduce their investments, that may impact our ability to bring new offerings and technologies to market and/or increase the investment that is necessary for the Company to make in order to remain competitive, either of which could have a material adverse effect on our business, results of operations and financial condition.
We compete domestically and internationally against space systems components providers, including Amergient Technologies, Space Micro Inc., Rocket Lab Space Systems (a segment of Rocket Labs), and in some cases against large companies such as Northrup Grumman. We may also face competition in the future from emerging low-cost competitors in Europe, India, Russia and China.
We compete domestically and internationally against space systems components providers, including Moog Inc., Space Micro Inc., Rocket Lab USA, Inc. (a segment of Rocket Labs), and in some cases against large companies such as Northrup Grumman. We may also face competition in the future from emerging low-cost competitors in Europe, India, Russia and China.
However, given the early stage of the proceedings, a reasonable estimate of the amount of any possible loss or range of loss cannot be made at this time.
However, given the current stage of the proceedings, a reasonable estimate of the amount of any possible loss or range of loss cannot be made at this time.
In addition, any improvements in technology may make our existing products, designs or any component of our products prior to the end of its life obsolete.
In addition, any improvements in technology may make our existing products, designs or any component of our core offerings prior to the end of its life obsolete.
The insurance proceeds received in connection with a partial or total loss of the functional capacity of certain of our products would not be sufficient to cover the replacement cost, if we choose to do so, of such products.
The insurance proceeds received in connection with a partial or total loss of the functional capacity of certain of our core offerings would not be sufficient to cover the replacement cost, if we choose to do so, of such offerings.
In addition, pursuant to the Registration Rights Agreements, dated October 28, 2022, by and among us and the Investors (the “Series A Registration Rights Agreement”), no later than July 28, 2023, we will be required to file a shelf registration statement to permit the public resale of the shares of common stock underlying the Investors’ Series A Convertible Preferred Stock, and each party will also have additional demand and “piggyback” registration rights with respect to those shares.
In addition, pursuant to the Registration Rights Agreements, dated October 28, 2022, by and among us and the Investors (the “Series A Registration Rights Agreement”), we will be required to file a shelf registration statement to permit the public resale of the shares of common stock underlying the Investors’ Series A Convertible Preferred Stock, and each party will also have additional demand and “piggyback” registration rights with respect to those shares.
Furthermore, we cannot be sure that our competitors will not develop competing technologies that gain market acceptance in advance of our products. We also rely on our customers to fund/co-fund development of new offerings and technologies.
Additionally, we cannot be sure that our competitors will not develop competing technologies that gain market acceptance in advance of our offerings. We also rely on our customers to fund/co-fund development of new offerings and technologies.
Our ability to grow our business depends on the successful development and continued refinement of many of our proprietary technologies, products, and service offerings, which are subject to many uncertainties, some of which are beyond our control. The market for our products and services is characterized by rapid change and technological improvements.
Our ability to grow our business depends on the successful development and continued refinement of many of our proprietary technologies, products, and service offerings, which are subject to many uncertainties, some of which are beyond our control. The market for our core space infrastructure offerings is characterized by rapid change and technological improvements.
Changes in these factors, including actual returns on plan assets, may affect our plan funding, cash flows and stockholders’ equity.
Changes in these factors, including actual returns on plan assets, may affect our plan funding, cash flows and shareholders’ equity.
Application of these laws to our business may negatively impact our performance in various ways, limiting the collaborations we may pursue, further regulating the export and re-export of our products, services, and technology from the United States and abroad, and increasing our costs and the time necessary to obtain required authorization.
Application of these laws to our business may negatively impact our performance in various ways, limiting the collaborations we may pursue, further regulating the export and re-export of our products, services, and technology from the U.S. and abroad, and increasing our costs and the time necessary to obtain required authorization.
In addition, there can be no assurance that the market for our products will develop or continue to expand or that we will be successful in newly identified markets as we currently anticipate.
In addition, there can be no assurance that the market for our core offerings will develop or continue to expand or that we will be successful in newly identified markets as we currently anticipate.
If certain of our products and services are sold to customers, and such customers were to be involved in a public incident, accident or catastrophe, or if the market believed there to be substantial risks within our industry, this could create an adverse public perception of spaceflight and result in decreased customer demand for spaceflight experiences, which could cause a material adverse effect on our stock price, business, financial conditions and results of operations.
If certain of our core offerings are sold to customers, and if such customers were to be involved in a public incident, accident or catastrophe, or if the market believed there to be substantial risks within our industry, this could create an adverse public perception of spaceflight and result in decreased customer demand for spaceflight experiences, which could cause a material adverse effect on our business, financial conditions and results of operations.
Our maintenance of higher levels of indebtedness could have adverse consequences including impairing our ability to obtain additional financing in the future Our level of debt places significant demands on our cash resources, which could: • make it more difficult to satisfy our outstanding debt obligations; • require us to dedicate a substantial portion of our cash for payments related to our debt, reducing the amount of cash flow available for working capital, capital expenditures, entitlement of our real estate assets, contributions to our tax-qualified pension plan, and other general corporate purposes; • limit our flexibility in planning for, or reacting to, changes in the industries in which we compete; • place us at a competitive disadvantage with respect to our competitors, some of which have lower debt service obligations and greater financial resources than we do; • limit our ability to borrow additional funds; • limit our ability to expand our operations through acquisitions; and • increase our vulnerability to general adverse economic and industry conditions If we are unable to generate sufficient cash flow to service our debt and fund our operating costs, our liquidity may be adversely affected.
Our maintenance of higher levels of indebtedness could have adverse consequences including impairing our ability to obtain additional financing in the future Our level of debt places significant demands on our cash resources, which could: • make it more difficult to satisfy our outstanding debt obligations; • require us to dedicate a substantial portion of our cash for payments related to our debt, reducing the amount of cash flow available for working capital, capital expenditures, entitlement of our real estate assets, contributions to our tax-qualified pension plan, and other general corporate purposes; • limit our flexibility in planning for, or reacting to, changes in the industries in which we compete; • place us at a competitive disadvantage with respect to our competitors, some of which have lower debt service obligations and greater financial resources than we do; • limit our ability to borrow additional funds; • limit our ability to expand our operations through acquisitions; and • increase our vulnerability to general adverse economic and industry conditions.
On April 14, 2022, we entered into a common stock Purchase Agreement (the “Purchase Agreement”) with B. Riley Principal Capital, LLC (“B. Riley”), pursuant to which B. Riley has committed to purchase up to $80.0 million of our common stock, subject to certain limitations and conditions set forth in the Purchase Agreement.
On April 14, 2022, we entered into a common stock Purchase Agreement (the “Purchase Agreement”) with B. Riley, pursuant to which B. Riley has committed to purchase up to $80.0 million of our common stock, subject to certain limitations and conditions set forth in the Purchase Agreement.
Complying with these evolving obligations is costly. Expanding definitions and interpretations of what constitutes “personal data” (or the equivalent) within the United States, the EEA and elsewhere may increase our compliance costs and legal liability.
Complying with these evolving obligations is costly. Expanding definitions and interpretations of what constitutes “personal data” (or the equivalent) within the U.S., the EEA and elsewhere may increase our compliance costs and legal liability.
Riley under the Purchase Agreement), we would only receive aggregate gross proceeds of approximately $18.5 million, Therefore, because the market prices of our common stock fluctuates, the actual purchase prices to be paid by B.
Riley under the Purchase Agreement), we would only receive aggregate gross proceeds of approximately $21.6 million. Therefore, because the market prices of our common stock fluctuates, the actual purchase prices to be paid by B.
We are also subject to non-U.S. privacy rules and regulations, such as the European Union’s (“E.U.”) General Data Protection Regulation (“GDPR”), the European e-Privacy Regulation and national laws supplementing GDPR, the Data Protection Act of 2018 (“DPA 18”) in the United Kingdom, and the E.U. Privacy and Electronic Communications Regulation.
We are also subject to non-U.S. privacy rules and regulations, such as the EU’s General Data Protection Regulation (“GDPR”), the European e-Privacy Regulation and national laws supplementing GDPR, the Data Protection Act of 2018 (“DPA 18”) in the United Kingdom, and the EU Privacy and Electronic Communications Regulation.
Additionally, on December 17, 2021, the Company, our CEO, Peter Cannito, and, our CFO, William Read, were named as defendants in a putative class action complaint filed in the United States District Court for the Middle District of Florida.
Additionally, on December 17, 2021, the Company, our CEO, Peter Cannito, and, our then current, but now former CFO, William Read, were named as defendants in a putative class action complaint filed in the United States District Court for the Middle District of Florida.
While we intend to design our products and technologies for a certain lifespan, which corresponds to a number of cycles, there can be no assurance as to the actual operational life of a product or that the operational life of individual components will be consistent with its design life.
While we intend to design our core offerings for a certain lifespan, which corresponds to a number of cycles, there can be no assurance as to the actual operational life of a product or that the operational life of individual components will be consistent with its design life.
Our international business is subject to both U.S. and foreign laws and regulations, including, without limitation, laws and regulations relating to export/import controls, economic sanctions, technology transfer restrictions, government contracts and procurement, data privacy and protection, anti-corruption (including the anti-bribery, books and records, and internal controls provisions of the FCPA governing interactions with foreign government officials), the anti-boycott provisions of the U.S.
Our international business is subject to both U.S. and foreign laws and regulations, including, without limitation, laws and regulations relating to export/import controls, economic sanctions, technology transfer restrictions, government contracts and procurement, data privacy and protection, anti-corruption (including the anti-bribery, books and records, and internal controls provisions of the U.S.
Export Administration Act, security restrictions and intellectual property. Failure by us, our employees, subsidiaries, affiliates, partners or others with whom we work to comply with any of these applicable laws and regulations could result in administrative, civil, commercial or criminal liabilities, including suspension or debarment from government contracts or suspension of our export/import privileges.
Failure by us, our employees, subsidiaries, affiliates, partners or others with whom we work to comply with any of these applicable laws and regulations could result in administrative, civil, commercial or criminal liabilities, including suspension or debarment from government contracts or suspension of our export/import privileges.
Further, certain government bodies may have priority with respect to the use of our products and services for national defense reasons, which may impact our cadence of producing and selling products and services to other customers.
Further, certain government bodies may have priority with respect to the use of our core offerings for national defense reasons, which may impact our cadence of producing and selling our core offerings to other customers.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeWe also have North American locations in California, Colorado, Florida, Indiana, Massachusetts and New Mexico. In Europe, we have one facility in Luxembourg and one in Belgium. Each of these facilities is strategically located near major national security or civil space community facilities, key customer facilities, commercial space centers and/or prestigious engineering talent pools.
Biggest changeIn North America we have two facilities in California, four facilities in Colorado, two facilities in Florida, and one facility in Indiana, Massachusetts, New Mexico and Virginia, respectively. In Europe, we have one facility in Luxembourg and one in Belgium.
However, as we continue to grow, we plan to continue and even accelerate the pace of leasehold improvements so that our facility capacity is not a limiting factor on our growth. Expansion and reconfiguration of our existing facilities are also being studied to support further growth and cost optimization in the future.
However, as we continue to grow, we plan to continue and even accelerate the pace of leasehold improvements so that our facility capacity is not a limiting factor on our growth. Expansion and reconfiguration of our existing facilities are also being studied to support further growth and cost optimization in the future. Page 39
Item 2. Properties We operate from 10 locations in the United States and 2 locations in Europe consisting of offices, warehouses, service centers, laboratories and other facilities approximating 335,922 square feet as of December 31, 2022. The Company also retains use of additional storage and administrative space as needed to support operations, which are not included in the table below.
Item 2. Properties We operate from 12 locations in the United States and 2 locations in Europe consisting of offices, warehouses, service centers, laboratories and other facilities approximating 363,213 square feet as of December 31, 2023. The Company also retains use of additional storage and administrative space as needed to support operations, which are not included in the table below.
We lease all of our properties. The majority of leases are for varying term lengths up to eight years. Our locations range in size from 2,136 to 52,797 square feet. Our headquarters is located in Jacksonville, Florida, in proximity to major NASA and other space offices and operations.
We lease all of our properties. The majority of leases are for varying term lengths up to nine years. Our locations range in size from 4,740 to 52,800 square feet. Our headquarters is located in Jacksonville, Florida, in proximity to major NASA and other space offices and operations.
(ii) The Company retains the offices and laboratories for Made in Space within the same facility as the Corporate Headquarters. We believe that our properties are in good operating condition and believe the productive capacity of our properties is adequate to meet current contractual requirements and those for the foreseeable future.
Each of these facilities is strategically located near major national security or civil space community facilities, key customer facilities, commercial space centers and/or prestigious engineering talent pools. We believe that our properties are in good operating condition and believe the productive capacity of our properties is adequate to meet current contractual requirements and those for the foreseeable future.
Removed
Page 46 Company Location Facilities Domestic Corporate Headquarters Jacksonville, Florida 1 Adcole Marlborough, Massachusetts 1 Deep Space Systems Littleton, Colorado 1 Deployable Space Systems Goleta, California 2 Loadpath Albuquerque, New Mexico 1 Made in Space Jacksonville, Florida (ii) 1 Oakman Littleton, Colorado (i) 1 Roccor Longmont, Colorado 1 Techshot Merritt Island, Florida 1 Greenville, Indiana 1 Foreign Made in Space Europe Luxembourg City, Luxembourg 1 Redwire Space NV Antwerp, Belgium 1 (i) During 2022, the Company exited certain locations after the lease expiration to consolidate operations within the respective state.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeExcluding pending matters referenced below, the outcome of these matters, individually and in the aggregate, is not expected to have a material impact on the Company’s consolidated financial statements. For additional information on pending matters, please refer to Note N of the accompanying notes to the consolidated financial statements.
Biggest changeExcluding pending matters referenced below, the outcome of these matters, individually and in the aggregate, is not expected to have a material impact on the Company’s consolidated financial statements. For additional information on pending matters, please refer to Note N – Commitments and Contingencies of the accompanying notes to the consolidated financial statements.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest change(“Bain Capital”) and certain other investors for aggregate proceeds of $81.3 million. These shares were issued in a private placement exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended. Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. Stock Performance Graph Not applicable. Item 6. [Reserved]
Biggest change(“Bain Capital”) and certain other investors for aggregate proceeds of $81.3 million. These shares were issued in a private placement exempt from registration under Section 4(a)(2) of the Securities Act of 1933, as amended.
Holders As of March 28, 2023, there were 37 holders of our common stock and 12 holders of our warrants of record. These numbers do not include an estimate of the indeterminate number of beneficial holders whose shares and warrants may be held by brokerage firms and clearing agencies.
Holders As of March 15, 2024, there were 37 holders of our common stock and 11 holders of our warrants of record. These numbers do not include an estimate of the indeterminate number of beneficial holders whose shares and warrants may be held by brokerage firms and clearing agencies.
On October 28, 2022 and November 3, 7 and 8, 2022, we issued a total of 81,250 shares of Series A Convertible Preferred Stock to AE Industrial Partners Fund II, LP (“AEI Fund II”) and AE Industrial Partners Structured Solutions I, LP (“AEI Structured Solutions”), affiliates of AEI, BCC Redwire Aggregator, L.P.
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Offerings On October 28, 2022 and November 3, 7 and 8, 2022, we issued a total of 81,250 shares of Series A Convertible Preferred Stock to AE Industrial Partners Fund II, LP (“AEI Fund II”) and AE Industrial Partners Structured Solutions I, LP (“AEI Structured Solutions”), affiliates of AEI, BCC Redwire Aggregator, L.P.
Each warrant entitles the registered holder to purchase one share of our common stock at a price of $11.50 per Page 47 share, subject to certain adjustments. As of March 28, 2023, there were 64,280,631 shares of common stock outstanding and 8,188,811 public warrants outstanding.
Each warrant entitles the registered holder to purchase one share of our common stock at a price of $11.50 per share, subject to certain adjustments. As of March 15, 2024, there were 65,578,724 shares of common stock outstanding and 8,188,811 public warrants outstanding.
Removed
Recent Sales of Unregistered Securities; Use of Proceeds from Registered Offerings During the three months ended December 31, 2022, the Company issued no shares of common stock to B. Riley Principal Capital, LLC (“B. Riley”) under the Common Stock Purchase Agreement (the “Agreement”), dated April 14, 2022.
Added
On May 1, 2023 and November 1, 2023, in accordance with the Convertible Preferred Stock Certificate of Designation, the Company issued 6,039.66 and 6,600.54 shares, respectively, of Series A Convertible Preferred Stock to holders of record as of April 15, 2023 and October 15, 2023, respectively, as a dividend paid-in-kind on the Convertible Preferred Stock.
Added
Purchases of Equity Securities by the Issuer and Affiliated Purchasers None. Page 40 Stock Performance Graph Not applicable. Item 6. [Reserved]

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeResults of Operations Results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021 The following table presents our results of operations for the year ended December 31, 2022 compared to the year ended December 31, 2021 expressed in U.S. thousands of dollars, along with the percentage of revenues and the dollar and percent change compared to the prior period: Year Ended $ Change from prior year period % Change from prior year period (in thousands, except percentages) December 31, 2022 % of revenues December 31, 2021 % of revenues Revenues $ 160,549 100 % $ 137,601 100 % $ 22,948 17 % Cost of sales 131,854 82 108,224 79 23,630 22 Gross margin 28,695 18 29,377 21 (682) (2) Operating expenses: Selling, general and administrative expenses 70,342 44 78,695 57 (8,353) (11) Contingent earnout expense — — 11,337 8 (11,337) (100) Transaction expenses 3,237 2 5,016 4 (1,779) (35) Impairment expense 96,623 60 — — 96,623 100 Research and development 4,941 3 4,516 3 425 9 Operating income (loss) (146,448) (91) (70,187) (51) (76,261) 109 Interest expense, net 8,219 5 6,456 5 1,763 27 Other (income) expense, net (16,075) (10) (3,837) (3) (12,238) 319 Income (loss) before income taxes (138,592) (86) (72,806) (53) (65,786) 90 Income tax expense (benefit) (7,972) (5) (11,269) (8) 3,297 (29) Net income (loss) (130,620) (81) (61,537) (45) (69,083) 112 Net income (loss) attributable to noncontrolling interests (3) — — — (3) (100) Net income (loss) attributable to Redwire Corporation $ (130,617) (81) % $ (61,537) (45) % $ (69,080) 112 % For purposes of the following discussion and analysis, any financial impact related to the acquisition of Oakman Aerospace, Inc.
Biggest changeResults of Operations For purposes of the following discussion and analysis, any financial impact related to the acquisition of Redwire Space NV (f/k/a QinetiQ Space NV) (“Space NV”) is referred to as the “Space NV Acquisition.” Page 41 Table of Contents Results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022 The following table presents our results of operations for the year ended December 31, 2023 compared to the year ended December 31, 2022: Year Ended $ Change from prior year period % Change from prior year period (in thousands, except percentages) December 31, 2023 % of revenues December 31, 2022 % of revenues Revenues $ 243,800 100 % $ 160,549 100 % $ 83,251 52 % Cost of sales 185,831 76 131,854 82 53,977 41 Gross margin 57,969 24 28,695 18 29,274 102 Operating expenses: Selling, general and administrative expenses 68,525 28 70,342 44 (1,817) (3) Transaction expenses 13 — 3,237 2 (3,224) (100) Impairment expense — — 96,623 60 (96,623) (100) Research and development 4,979 2 4,941 3 38 1 Operating income (loss) (15,548) (6) (146,448) (91) 130,900 (89) Interest expense, net 10,699 4 8,219 5 2,480 30 Other (income) expense, net 1,503 1 (16,075) (10) 17,578 (109) Income (loss) before income taxes (27,750) (11) (138,592) (86) 110,842 (80) Income tax expense (benefit) (486) — (7,972) (5) 7,486 (94) Net income (loss) (27,264) (11) (130,620) (81) 103,356 (79) Net income (loss) attributable to noncontrolling interests (1) — (3) — 2 (67) Net income (loss) attributable to Redwire Corporation $ (27,263) (11) % $ (130,617) (81) % $ 103,354 (79) % Revenues Revenues increased by $83.3 million, or 52%, for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
We believe that our existing sources of liquidity will be sufficient to meet our working capital needs and comply with our debt covenants for at least the next twelve months from the date on which our consolidated financial statements were issued.
We believe our existing sources of liquidity will be sufficient to meet our working capital needs and comply with our debt covenants for at least the next twelve months from the date on which our consolidated financial statements were issued.
Adjusted EBITDA is defined as net income (loss) adjusted for interest expense (income), net, income tax (benefit) expense, depreciation and amortization, impairment expense, acquisition deal costs, acquisition integration costs, acquisition earnout costs, purchase accounting fair value adjustment related to deferred revenue, severance costs, capital market and advisory fees, litigation-related expenses, write-off of long-lived assets, equity-based compensation, committed equity facility transaction costs, debt financing costs, and warrant liability fair value adjustments.
Adjusted EBITDA is defined as net income (loss) adjusted for interest expense, net, income tax expense (benefit), depreciation and amortization, impairment expense, acquisition deal costs, acquisition integration costs, acquisition earnout costs, purchase accounting fair value adjustment related to deferred revenue, severance costs, capital market and advisory fees, litigation-related expenses, write-off of long-lived assets, equity-based compensation, committed equity facility transaction costs, debt financing costs, and warrant liability change in fair value adjustments.
Risk Factors” and the "Cautionary Note Regarding Forward-Looking Statements” sections of this Annual Report on Form 10-K. Unless the context otherwise requires, all references in this section to the “Company,” “Redwire,” “we,” “us” or “our” refer to Redwire Corporation and its consolidated subsidiaries.
“Risk Factors” and the "Cautionary Note Regarding Forward-Looking Statements” sections of this Annual Report on Form 10-K. Unless the context otherwise requires, all references in this section to the “Company,” “Redwire,” “we,” “us” or “our” refer to Redwire Corporation and its consolidated subsidiaries.
Redwire incurred expenses related to the Audit Committee investigation and securities litigation as further described in Note N of the accompanying notes to the consolidated financial statements. vi. Redwire incurred expenses related to equity-based compensation under Redwire’s equity-based compensation plan. vii. Redwire incurred expenses related to the committed equity facility with B.
Redwire incurred expenses related to the 2021 Audit Committee investigation and resulting securities litigation as further described in Note N of the accompanying notes to the consolidated financial statements. vi. Redwire incurred expenses related to equity-based compensation under Redwire’s equity-based compensation plan. vii. Redwire incurred expenses related to the committed equity facility with B.
These costs are presented in the consolidated statements of operations as follows: • Service cost are included with other employee compensation costs within cost of sales and selling, general and administrative expenses. • The other components of net benefit cost are presented within other (income) expense, net, outside of operating expenses.
These costs are presented in the consolidated statements of operations and comprehensive income (loss) as follows: • Service cost are included with other employee compensation costs within cost of sales and selling, general and administrative expenses. • The other components of net benefit cost are presented within other (income) expense, net, outside of operating expenses.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to “Item 1A.
Our actual results may differ materially from those anticipated in these forward-looking statements as a result of many factors. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to Item 1A.
These cash balance plans are defined benefit plans which provide for post-retirement benefits based on employee and employer contributions and prescribed rates of return in accordance with Belgium Regulation. Accordingly, all Space NV employees are eligible to participate in the supplementary pensions immediately upon entry into service and until the legal retirement age of 65 years (in 2022).
These cash balance plans are defined benefit plans which provide for post-retirement benefits based on employee and employer contributions and prescribed rates of return in accordance with Belgium Regulation. Accordingly, all Space NV employees are eligible to participate in the supplementary pensions immediately upon entry into service and until the legal age of retirement.
Post-retirement Benefit Plans Through the Space NV acquisition, the Company sponsors various post-retirement benefit plans for certain non-U.S. employees including two cash balance plans: (i) a defined benefit pension plan with risk-based coverage for death and disability benefits (collectively, the “Base Plan”) and (ii) a supplementary pension bonus plan that provides variable remuneration linked to employees’ performance (the “Performance Plan”).
Post-retirement Benefit Plans Through the Space NV acquisition, the Company sponsors various post-retirement benefit plans for certain non-U.S. employees including three cash balance plans: (i) a defined benefit pension plan with risk-based coverage for death and disability benefits (collectively, the “Base Plan”) and (ii) two supplementary pension bonus plans that provide variable remuneration linked to employees’ performance (the “Performance Plans”).
Changes in EAC are applied retrospectively and when adjustments in estimated contract costs are identified, such revisions may result in current period adjustments to earnings applicable to performance in prior periods.
Changes in estimates are retrospectively applied and when adjustments in estimated contract costs are identified, such revisions may result in current period adjustments to earnings applicable to performance in prior periods.
Contracted backlog activity for the first four full quarters since the entities’ acquisition date is included in acquisition-related contracted backlog change. After the completion of four fiscal quarters, acquired entities are treated as organic for current and comparable historical periods.
Organic backlog change excludes backlog activity from acquisitions for the first four full quarters since the entities’ acquisition date. Contracted backlog activity for the first four full quarters since the entities’ acquisition date is included in acquisition-related contracted backlog change. After the completion of four fiscal quarters, acquired entities are treated as organic for current and comparable historical periods.
Page 61 Table of Contents Critical Accounting Estimates For the critical accounting estimates used in preparing our consolidated financial statements, we make assumptions and judgments that can have a significant impact on net revenues, cost and expenses, and other (income) expense, net, in our consolidated statements of operations and comprehensive income (loss), as well as, on the value of certain assets and liabilities on our consolidated balance sheets.
For the critical accounting estimates used in preparing our consolidated financial statements, we make assumptions and judgments that can have a significant impact on net revenues, cost and expenses, and other (income) expense, net, in our consolidated statements of operations and comprehensive income (loss), as well as, on the value of certain assets and liabilities on our consolidated balance sheets.
Revenue is recognized over time (versus point in time recognition), due to the fact that the Company’s performance creates an asset with no alternative use to the Company and the Company has an enforceable right to payment for performance completed to date.
Revenue is recognized over time for FFP and CPFF contracts (versus point in time recognition) due to the fact that the Company’s performance creates an asset with no alternative use to the Company and the Company has an enforceable right to payment for performance completed to date.
Our future operating results are subject to, among others, general economic conditions, including as a result of the COVID-19 pandemic, heightened inflation, rising interest rates and supply chain pressures, competitive dynamics in our target markets as well as legislative and regulatory factors that may be outside of our control.
Our future operating results are subject to, among others, general economic conditions, including as a result of heightened inflation, rising interest rates and supply chain pressures, competitive dynamics in our target markets as well as legislative and regulatory factors that may be outside of our control.
The Company also considers factors such as the timing and amounts of expected contributions to the plans and expected benefit payments to plan participants. The following disclosures include information related to key assumptions used to determine the projected benefit obligation and plan assets, which drive the net funded status recognized on the Company’s consolidated balance sheets.
The Company also considers factors such as the timing and amounts of expected contributions to the plans and expected benefit payments to plan participants. The following disclosures include information related to key assumptions used to determine the projected benefit obligation and plan assets, which drive the net funded status recognized on the Company’s consolidated financial statements.
Page 64 Table of Contents The amount of plan assets includes amounts contributed by the employee and employer and amounts earned from investing the contributions, less benefits paid. In accordance with the Company’s group insurance policies, contributions are invested in commingled investment funds, consisting of underlying equity and fixed income securities, respectively.
The amount of plan assets includes amounts contributed by the employee and employer and amounts earned from investing the contributions, less benefits paid. In accordance with the Company’s group insurance policies, contributions are invested in commingled investment funds, consisting of underlying equity and fixed income securities, respectively.
Combined employee and employer premiums are invested by the insurance company in Branch 21 investment funds in accordance with Belgium Regulation, which are mainly comprised of fixed income assets, which are commingled with the plan assets of other group insurances for the purpose of providing guaranteed returns.
Combined employee and employer premiums are invested by the insurance company in Branch 21 investment funds in accordance with Belgium Regulation, which are mainly comprised of fixed income assets, which are commingled with the plan assets of other group insurances for the purpose of Page 50 Table of Contents providing guaranteed returns.
As a result of the foregoing, the Company has determined that the unit of account is the insurance contract and therefore, on a plan-by-plan basis, recognizes the net funded status as either a net asset recorded within other non-current assets or a net liability recorded within other non-current liabilities within the consolidated balance sheets.
As a result of the foregoing, the Company has determined that the unit of account is the insurance contract and therefore, on a plan-by-plan basis, recognizes the net funded status as either a net asset recorded within other non-current assets or a net liability recorded within other non-current liabilities within the consolidated financial statements.
Page 54 Table of Contents The table below presents a reconciliation of Adjusted EBITDA and Pro Forma Adjusted EBITDA to net income (loss), computed in accordance with U.S.
The table below presents a reconciliation of Adjusted EBITDA and Pro Forma Adjusted EBITDA to net income (loss), computed in accordance with U.S.
Contracted backlog from foreign operations in Luxembourg and Belgium was $129.9 million and $5.3 million as of December 31, 2022 and December 31, 2021, respectively. These amounts are subject to foreign exchange rate translations from euros to U.S. dollars that could cause the remaining backlog balance to fluctuate with the foreign exchange rate at the time of measurement.
Contracted backlog from foreign operations in Luxembourg and Belgium was $106.0 million and $129.9 million as of December 31, 2023 and December 31, 2022, respectively. These amounts are subject to foreign exchange rate translations from euros to U.S. dollars that could cause the remaining backlog balance to fluctuate with the foreign exchange rate at the time of measurement.
Because not all companies use identical calculations, our presentation of Non-GAAP measures may not be comparable to other similarly titled measures of other companies.
Because not all companies use identical calculations, Page 43 Table of Contents our presentation of Non-GAAP measures may not be comparable to other similarly titled measures of other companies.
In assessing the need for a valuation allowance, we evaluate all significant available positive and negative evidence, including historical operating results, estimates of future sources of taxable income, carry-forward periods available, the existence of prudent and feasible tax planning strategies and other relevant factors.
Income Taxes Significant judgments are required in order to determine the realizability of tax assets. In assessing the need for a valuation allowance, we evaluate all significant available positive and negative evidence, including historical operating results, estimates of future sources of taxable income, carry-forward periods available, the existence of prudent and feasible tax planning strategies and other relevant factors.
The Company measures the private warrant liability at fair value each reporting period with the change in fair value recorded as other (income) expense, net in the consolidated statements of operations and comprehensive income (loss). The Company measured public warrants at the fair value of the equity instruments as of the date of the Merger.
The Company measures the private warrant liability at fair value each reporting period with the change in fair value recorded as other (income) expense, net in the consolidated statements of operations and comprehensive income (loss).
Page 56 Table of Contents Organic contract value includes the remaining contract value as of January 1 not yet recognized as revenue and additional orders awarded during the period for those entities treated as organic.
Organic contract value includes the remaining contract value as of January 1 not yet recognized as revenue and additional orders awarded during the period for those entities treated as organic. Acquisition-related contract value includes remaining contract value as of the acquisition date not yet recognized as revenue and additional orders awarded during the period for entities not treated as organic.
The fair value of the Company’s reporting units are generally determined using a combination of an income approach based on a discounted cash flow model as well as a market approach based on guideline public company revenues and earnings before interest, tax, depreciation and amortization multiples. Actual results could differ from these assumptions.
When performing a quantitative analysis, the fair value of the Company’s reporting units are generally determined using a combination of an income approach based on a discounted cash flow (“DCF”) model as well as a market approach based on guideline public company revenues and earnings before interest, tax, depreciation and amortization multiples.
Adverse macroeconomic conditions including, among others, heightened inflation, rising interest rates, volatility in capital markets, supply chain disruptions, labor shortages, regulatory challenges, and the ongoing impact of COVID-19 pandemic have affected the Company’s cost of capital, financial condition and results of operations.
Macroeconomic Environment We continue to evaluate the ongoing impact of adverse macroeconomic conditions including, among others, heightened inflation, rising interest rates, volatility in capital markets, supply chain disruptions, and regulatory challenges that have affected the Company’s cost of capital, financial condition and results of operations.
GAAP for the following periods: Year Ended (in thousands) December 31, 2022 December 31, 2021 Net income (loss) $ (130,620) $ (61,537) Interest expense 8,220 6,458 Income tax expense (benefit) (7,972) (11,269) Depreciation and amortization 11,288 10,584 Impairment expense 96,623 — Acquisition deal costs (i) 3,237 5,237 Acquisition integration costs (i) 3,915 2,383 Acquisition earnout costs (ii) — 11,337 Purchase accounting fair value adjustment related to deferred revenue (ii) 139 310 Severance costs (iii) 1,311 — Capital market and advisory fees (iv) 5,547 10,258 Litigation-related expenses (v) 2,877 2,978 Equity-based compensation (vi) 10,786 27,112 Committed equity facility transaction costs (vii) 1,364 — Debt financing costs (viii) 102 48 Warrant liability change in fair value adjustment (ix) (17,784) (2,629) Adjusted EBITDA (10,967) 1,270 Pro forma impact on Adjusted EBITDA (x) 3,932 1,979 Pro Forma Adjusted EBITDA $ (7,035) $ 3,249 i.
GAAP for the following periods: Year Ended (in thousands) December 31, 2023 December 31, 2022 Net income (loss) $ (27,264) $ (130,620) Interest expense, net 10,699 8,220 Income tax expense (benefit) (486) (7,972) Depreciation and amortization 10,724 11,288 Impairment expense — 96,623 Acquisition deal costs (i) 13 3,237 Acquisition integration costs (i) 546 3,915 Purchase accounting fair value adjustment related to deferred revenue (ii) 15 139 Severance costs (iii) 313 1,311 Capital market and advisory fees (iv) 8,607 5,547 Litigation-related expenses (v) 1,235 2,877 Equity-based compensation (vi) 8,658 10,786 Committed equity facility transaction costs (vii) 259 1,364 Debt financing costs (viii) 17 102 Warrant liability change in fair value adjustment (ix) 2,011 (17,784) Adjusted EBITDA 15,347 (10,967) Pro forma impact on Adjusted EBITDA (x) — 3,932 Pro Forma Adjusted EBITDA $ 15,347 $ (7,035) i.
Riley at the Company’s sole discretion, subject to certain limitations and conditions. Please refer to Note P of the accompanying notes to the consolidated financial statements for additional information. Net proceeds under the Purchase Agreement to the Company will depend on the frequency and prices at which the Company sells shares of its common stock to B. Riley.
Please refer to Note D – Fair Value of Financial Instruments of the accompanying notes to the consolidated financial statements for additional information. Net proceeds under the Purchase Agreement to the Company will depend on the frequency and prices at which the Company sells shares of its common stock to B. Riley.
For T&M contracts, the Company recognizes revenue reflecting the number of direct labor hours expended in the performance of a contract multiplied by the contract billing rate, as well as reimbursement of other direct billable costs.
Revenue from T&M contracts is recognized based on the number of direct labor hours expended in the performance of a contract multiplied by the contract billing rate, as well as reimbursement of other direct billable costs.
The year-over-year increase was primarily due to a gain recognized as a result of a decrease in the fair value of the private warrant liability of $17.8 million for the year ended December 31, 2022 as compared to $2.6 million for the year ended December 31, 2021.
This year-over-year decrease was primarily due to a $2.0 million loss as a result of an increase in the fair value of the Company’s private warrant liability for the year ended December 31, 2023 as compared to $17.8 million gain for the comparable period in 2022.
The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. Warrants As part of the Merger, public warrants were established as equity and private warrants were established as a liability.
The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement.
We base our assumptions, judgments and estimates on historical experience and various other factors that we believe are reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions. In accordance with the Company’s policies, we regularly evaluate estimates, assumptions, and judgments.
We base our assumptions, judgments and estimates on historical experience and various other factors Page 48 Table of Contents that we believe are reasonable under the circumstances. Actual results could differ materially from these estimates under different assumptions or conditions.
Liquidity and Capital Resources Our primary sources of liquidity are cash flows provided by our operations, access to existing credit facilities, proceeds from the issuance of common stock under the B. Riley committed equity facility and proceeds from the sale of Convertible Preferred Stock.
Liquidity and Capital Resources Our operations are primarily funded with cash flows provided by operating activities, access to existing credit facilities, proceeds from the issuance of common stock under the B. Riley (as defined below) committed equity facility and proceeds from the 2022 sale of Series A Convertible Preferred Stock.
There can be no assurance that any of these actions will be sufficient to allow us to service our debt obligations, meet our debt covenants, or that such actions will not result in an adverse impact on our business. On October 28, 2022, the Company entered into the Investment Agreements.
There can be no assurance that any of Page 46 Table of Contents these actions will be sufficient to allow us to service our debt obligations, meet our debt covenants, or that such actions will not result in an adverse impact on our business.
Please refer to Note P of the accompanying notes to the consolidated financial statements for additional information.
Please refer to Note J – Debt of the accompanying notes to the consolidated financial statements for additional information related to the Company’s debt obligations.
Additional risks for goodwill across all reporting units include, but are not limited to: • our failure to reach our internal forecasts could impact our ability to achieve our forecasted levels of cash flows and reduce the estimated discounted value of our reporting units; • adverse technological events that could impact our performance; • volatility in equity and debt markets resulting in higher discount rates; and • significant adverse changes in the regulatory environment or markets in which we operate.
Such events or circumstances may include, but are not limited to: • deterioration in overall economic conditions; • failure to reach our internal forecasts could impact our ability to achieve our forecasted levels of cash flows; • adverse technological events that could impact our performance; • volatility in equity and debt markets resulting in higher discount rates; and • significant adverse changes in the regulatory environment or markets in which we operate.
Please refer to Note D of the accompanying notes to the consolidated financial statements for additional information related to the private warrants and the Committed Equity Facility. Please refer to Note P of the accompanying notes to the consolidated financial statements for further information related to the Purchase Agreement with B. Riley.
Please refer to Note D – Fair Value of Financial Instruments of the accompanying notes to the consolidated financial statements for additional information related to the private warrants and committed equity facility.
Committed Equity Facility On April 14, 2022, the Company entered into an $80.0 million Purchase Agreement with B. Riley. The Purchase Agreement governs a committed equity facility that provides the Company with the right, without obligation, to sell and issue up to $80.0 million of its common stock over a period of 24 months to B.
The Purchase Agreement governs a committed equity facility that provides the Company with the right, without obligation, to sell and issue up to $80.0 million of its common stock over a period of 24 months to B. Riley at the Company’s sole discretion, subject to certain limitations and conditions.
Fair value is determined on a plan-by-plan basis and reflects key assumptions in effect as of the Measurement Date. Actuarial Assumptions The benefit obligations and assets of the Company’s defined benefit pension plans are measured using actuarial valuations, which are derived based on the terms of the insurance contract and other key assumptions provided for under Belgium Regulation.
Actuarial Assumptions The benefit obligations and assets of the Company’s defined benefit pension plans are measured using actuarial valuations, which are derived based on the terms of the insurance contract and other key assumptions provided for under Belgium Regulation.
The Company’s estimates are based upon the professional knowledge and experience of its engineers, program managers and other personnel, who review each long-term contract monthly to assess the contract’s schedule, performance, technical matters and estimated cost at completion. Subsequent to the adoption of ASU 2021-08, all changes in estimates are retrospectively applied.
The Company’s estimates are based upon the professional knowledge and experience of its engineers, program managers and other personnel, who review each long-term contract monthly to assess the contract’s schedule, performance, technical matters and EAC.
We are also a provider of innovative technologies with the potential to help transform the economics of space and create new markets for its exploration and commercialization. One example of this is our proprietary roll out solar array (ROSA) systems.
We are also a provider of innovative technologies with the potential to help transform the economics of space and create new markets for its exploration and commercialization.
Income Tax Expense (Benefit) The table below provides information regarding our income tax expense (benefit) for the following periods: Year Ended (in thousands, except percent) December 31, 2022 December 31, 2021 Income tax expense (benefit) $ (7,972) $ (11,269) Effective tax rate 5.8 % 15.5 % The decrease in our effective tax rate for the year ended December 31, 2022 compared to the year ended December 31, 2021 is primarily due to the impact of nondeductible impairment and the valuation of warrants during the year ended December 31, 2022 .
Income Tax Expense (Benefit) The table below provides information regarding our income tax expense (benefit) for the following periods: Year Ended (in thousands, except percentages) December 31, 2023 December 31, 2022 Income tax expense (benefit) $ (486) $ (7,972) Effective tax rate 1.8 % 5.8 % The decrease in our effective tax rate for the year ended December 31, 2023, as compared to the year ended December 31, 2022 is primarily due to the change in the fair market valuation of warrants, change in the valuation allowance, and the non-recurring impact of the non-deductible impairment of goodwill.
To drive future revenue growth, our goal is for the level of contracts awarded in a given period to exceed the revenue recorded, thus yielding a book-to-bill ratio greater than 1.0. Our book-to-bill ratio was 2.04 for the year ended December 31, 2022, as compared to 1.13 for the year ended December 31, 2021.
We view book-to-bill as an indicator of future revenue growth potential. To drive future revenue growth, our goal is for the level of contracts awarded in a given period to exceed the revenue recorded, thus yielding a book-to-bill ratio greater than 1.0.
Accordingly, for ASC 715 purposes, the best evidence of fair value for plan assets is the cash surrender value as of the Measurement Date.
Accordingly, for Accounting Standards Codification (“ASC”) 715 purposes, the best evidence of fair value for plan assets is the cash surrender value.
Interest Expense, net Interest expense, net increased $1.8 million, or 27.3%, for the year ended December 31, 2022 as compared to the year ended December 31, 2021.
Interest Expense, net Interest expense, net increased $2.5 million, or 30%, for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
Riley, which includes consideration paid to enter into the Purchase Agreement as well as changes in the fair value of the associated derivative asset. viii. Redwire incurred expenses related to debt financing agreements, including amendment related fees paid to third parties that are expensed in accordance with ASC 470, Debt .
Riley, which includes consideration paid to enter into the Purchase Agreement as well as changes in fair value recognized as a gain or loss during the respective periods. viii. Redwire incurred expenses related to debt financing agreements, including amendment related fees paid to third parties that are expensed in accordance with U.S. GAAP. Page 44 Table of Contents ix.
The fair value of each plan’s assets and benefit obligation is measured on December 31st (the “Measurement Date”), consistent with the Company’s fiscal year end, or more frequently, upon the occurrence of certain events such as a significant plan amendment, settlement, or curtailment.
The funded status is measured as the difference between the fair value of each plan’s assets and the benefit obligation. The fair value of each plan’s assets and benefit obligation is measured annually, or more frequently, upon the occurrence of certain events such as a significant plan amendment, settlement, or curtailment.
Contracted backlog represents the estimated dollar value of firm funded executed contracts for which work has not been performed (also known as the remaining performance obligations on a contract).
Contracted backlog represents the estimated dollar value of firm funded executed contracts for which work has not been performed (also known as the remaining performance obligations on a contract). Our contracted backlog includes $19.3 million and $37.4 million in remaining contract value from T&M contracts as of December 31, 2023 and as of December 31, 2022, respectively.
The contracts awarded balance includes firm contract orders including time and material contracts which were awarded during the period and does not include unexercised contract options or potential orders under indefinite delivery/indefinite quantity contracts.
The contracts awarded balance includes firm contract orders, including time-and-material (“T&M”) contracts, awarded during the period and does not include unexercised contract options or potential orders under indefinite delivery/indefinite quantity contracts. Although the contracts awarded balance reflects firm contract orders, terminations, amendments, or contract cancellations may occur which could result in a reduction to the contracts awarded balance.
As an emerging growth company that has completed a significant number of acquisitions in 2021 and 2022, we believe Pro Forma Adjusted EBITDA provides meaningful insights into the impact of strategic acquisitions as well as an indicative run rate of the Company’s future operating performance.
From March 2020 through December 31, 2023, the Company has completed nine acquisitions, and as such, we believe Pro Forma Adjusted EBITDA provides meaningful insights into the impact of strategic acquisitions as well as an indicative run rate of the Company’s future operating performance.
Under the Company’s group insurance policies, the insurance company guarantees minimum statutory reserves, employee and employer contributions, and specified annual rates of return.
This transfer of the benefit obligation is irrevocable and involves the transfer of substantially all risk from the Company to the insurance entity. Under the Company’s group insurance policies, the insurance company guarantees minimum statutory reserves, employee and employer contributions, and specified annual rates of return.
During the year ended December 31, 2022, the Company sold a total of 909,669 shares of the Company’s common stock for proceeds of $3.0 million pursuant to the Purchase Agreement. As of December 31, 2022, registered shares available for purchase under the committed equity facility were 8,090,331.
During the year ended December 31, 2023, the Company sold a total of 497,392 shares of the Company’s common stock for net proceeds of $1.2 million pursuant to the Purchase Agreement. As of December 31, 2023, the Company had 7,592,939 registered shares available for purchase under the committed equity facility.
Gross Margin Gross margin decreased $0.7 million, or 2%, for the year ended December 31, 2022 compared to the year ended December 31, 2021. As a percentage of sales, gross margin was 18% and 21% for the year ended December 31, 2022 and December 31, 2021, respectively.
Gross Margin Gross margin increased $29.3 million, or 102%, for the year ended December 31, 2023, as compared to the year ended December 31, 2022. As a percentage of revenues, gross margin was 24% and 18% for the year ended December 31, 2023 and 2022, respectively.
During 2022, the Company identified triggering events and performed impairment assessments on its long-lived assets, including right-of-used assets, in accordance with ASC 360. Please refer to Note K and Note T of the accompanying notes to the consolidated financial statements for additional information. Income Taxes Significant judgments are required in order to determine the realizability of tax assets.
During 2022, the Company identified triggering events and performed impairment tests on its long-lived assets, including right-of-use assets. Please refer to Note T – Impairment Expense of the accompanying notes to the consolidated financial statements for additional information.
During 2022, the Company performed its annual impairment tests as well as an interim assessment on its intangible assets, including goodwill, in accordance with ASC 350 and ASC 360. Please refer to Note G, Note H, Note I and Note T of the accompanying notes to the consolidated financial statements.
During 2022, the Company performed interim and annual impairment tests on its intangible assets, including goodwill, which resulted in impairment recognized during 2022. Please refer to Note T – Impairment Expense of the accompanying notes to the consolidated financial statements for additional information.
Classification of the public warrants as equity instruments and the private warrants as liability instruments is based on management’s analysis of the guidance in ASC 815 Derivatives and Hedging and in a statement issued by the Staff of the SEC regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies.” Management determined that while the public warrants meet the definition of a derivative, they meet the equity scope exception in ASC 815-10-15-74(a) to be classified in stockholders’ equity and are not subject to remeasurement provided that the Company continues to meet the criteria for equity classification.
Page 51 Table of Contents Private Warrants Classification of the Company’s private warrants is based on management’s analysis of the guidance in ASC 815, Derivatives and Hedging, and in a statement issued by the Staff of the Securities and Exchange Commission regarding the accounting and reporting considerations for warrants issued by special purpose acquisition companies entitled “Staff Statement on Accounting and Reporting Considerations for Warrants Issued by Special Purpose Acquisition Companies.” The Company determined that the private warrants meet the definition of a derivative and, therefore, are classified as a liability measured at fair value, subject to remeasurement at each reporting period.
Page 55 Table of Contents Key Performance Indicators Book-to-Bill Our book-to-bill ratio was as follows for the periods presented: Year Ended (in thousands, except ratio) December 31, 2022 December 31, 2021 Contracts awarded $ 327,035 $ 155,070 Revenues 160,549 137,601 Book-to-bill ratio 2.04 1.13 Book-to-bill is the ratio of total contracts awarded to revenues recorded in the same period.
Book-to-Bill Our book-to-bill ratio was as follows for the periods presented: Last Twelve Months (in thousands, except ratio) December 31, 2023 December 31, 2022 Contracts awarded $ 300,042 $ 327,035 Revenues 243,800 160,549 Book-to-bill ratio 1.23 2.04 Book-to-bill is the ratio of total contracts awarded to revenues recorded in the same period.
Similarly, organic revenue includes revenue earned during the period presented for those entities treated as organic, while acquisition-related revenue includes the same for all other entities, excluding any pre-acquisition revenue earned during the period.
Organic revenue includes revenue earned during the period presented for those entities treated as organic, while acquisition-related revenue includes the same for all other entities, excluding any pre-acquisition revenue earned during the period. There is no acquisition-related backlog activity presented in the table above as all acquired entities have completed four fiscal quarters post-acquisition.
Page 60 Table of Contents Cash Flows The table below summarizes certain information from the consolidated statements of cash flows for the following periods: Year Ended (in thousands) December 31, 2022 December 31, 2021 Net cash provided by (used in) operating activities $ (31,657) $ (37,358) Net cash provided by (used in) investing activities (37,382) (38,541) Net cash provided by (used in) financing activities 76,560 74,210 Effect of foreign currency rate changes on cash and cash equivalents 272 136 Net increase (decrease) in cash and cash equivalents 7,793 (1,553) Cash and cash equivalents at end of period $ 28,316 $ 20,523 Operating activities For the year ended December 31, 2022, net cash used in operating activities was $31.7 million.
Page 47 Table of Contents Cash Flows The table below summarizes certain information from the consolidated statements of cash flows for the following periods: Year Ended (in thousands) December 31, 2023 December 31, 2022 Cash and cash equivalents at beginning of year $ 28,316 $ 20,523 Operating activities: Net income (loss) (27,264) (130,620) Non-cash adjustments 21,700 94,900 Changes in working capital 6,795 4,063 Net cash provided by (used in) operating activities 1,231 (31,657) Net cash provided by (used in) investing activities (8,327) (37,382) Net cash provided by (used in) financing activities 9,060 76,560 Effect of foreign currency rate changes on cash and cash equivalents (2) 272 Net increase (decrease) in cash and cash equivalents 1,962 7,793 Cash and cash equivalents at end of period $ 30,278 $ 28,316 Operating activities Net cash provided by operating activities was $1.2 million during the year ended December 31, 2023, as compared to net cash used in operating activities of $31.7 million during the same period in 2022, resulting in a $32.9 million decrease in the use of cash year-over-year.
Finite-lived intangible assets are reported at cost, net of accumulated amortization, and are either amortized on a straight-line basis over their estimated useful lives or over the period the economic benefits of the intangible asset are consumed. Significant judgment is also required in assigning the respective useful lives of intangible assets.
Finite-lived intangible assets and long-lived assets are amortized to expense over their estimated useful life on a straight-line basis or over the period the economic benefits of the intangible asset are consumed.
Please refer to Note G, Note H, Note I, Note K and Note T of the accompanying notes to the consolidated financial statements for additional information related to impairment. Research and Development Research and development expenses increased $0.4 million, or 9%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Please refer to Note T – Impairment Expense of the accompanying notes to the consolidated financial statements for additional information. Research and Development Research and development expenses for the year ended December 31, 2023 remained materially consistent as compared with the same period in 2022.
The transaction expenses incurred in the year ended December 31, 2022 were primarily related to the acquisitions of Techshot and Space NV, while transaction expenses incurred in the year ended December 31, 2021 included the 2021 Acquisitions.
The transaction expenses incurred during the year ended December 31, 2022 were primarily related to the Page 42 Table of Contents Redwire Space Technologies, Inc. (f/k/a Techshot, Inc.) and Space NV acquisitions while there were nominal expenses incurred during the year ended December 31, 2023.
In circumstances where a qualitative analysis indicates that the fair value of a reporting unit does not exceed its carrying value, a quantitative analysis is performed using an income approach. Impairment testing requires management to make certain assumptions based upon information available at the time and have been deemed reasonable by management as of the measurement date.
In circumstances where a qualitative analysis indicates that the fair value of a reporting unit does not exceed its carrying value, a quantitative analysis is performed using an income approach.
We offer a broad array of products and services, many of which have been enabling space missions since the 1960s and have been flight-proven on over 200 spaceflight missions, including missions such as the GPS constellation, New Horizons and Perseverance.
Our core space infrastructure offerings include a broad array of modern products and services, which have been enabling space missions since the 1960s and have been flight-proven on over 200 spaceflight missions, including missions such as the National Aeronautics and Space Administration’s (“NASA”) Artemis program, New Horizons and Perseverance, the Space Forces’ GPS, and the European Space Agency’s (“ESA”) Project for On-Board Autonomy (“PROBA”) programs.
Of this amount, $13.1 million related to property, plant and equipment, $30.9 million related to intangible assets, $2.7 million related to right-of-use assets and $49.9 million related to goodwill. There was no such impairment charge during the year ended December 31, 2021.
In comparison, during the year ended December 31, 2022, the Company performed an interim and annual quantitative impairment assessment, which resulted in a non-cash, pre- and post-tax impairment charge of $96.6 million. Of this amount, $13.1 million related to property and equipment, $2.7 million related to right-of-use assets, $30.9 million related to intangible assets and $49.9 million related to goodwill.
The year-over-year increase in cost of sales was primarily driven by increased costs associated with revenue growth for the period, $6.6 million of contributed cost of sales from the Techshot acquisition and $9.2 million of contributed cost of sales from the Space NV acquisition, as well as the macroeconomic factors discussed above, primarily in the Mission Solutions reporting unit.
Cost of Sales Cost of sales increased $54.0 million, or 41%, for the year ended December 31, 2023, as compared to the year ended December 31, 2022. The year-over-year increase in cost of sales was primarily driven by increased costs associated with revenue growth for the period and $36.7 million of contributed cost of sales from the Space NV Acquisition.
The Company has four reporting units, Mission Solutions, Space Components, Engineering Services, and Redwire Europe, which were determined based on similar economic characteristics, financial metrics and product and servicing offerings. Goodwill is tested annually for impairment as of October 1, or more frequently if events or circumstances indicate the carrying value may be impaired.
The Company has four reporting units, Mission Solutions, Space Components, Engineering Services, and Redwire Europe, which were determined based on similar economic characteristics, financial metrics and product and servicing offerings. We may use both qualitative and quantitative approaches when testing goodwill and indefinite-lived intangible assets for impairment.
Redwire incurred acquisition costs including due diligence, integration costs and additional expenses related to pre-acquisition activity. ii. Redwire incurred acquisition costs related to the Roccor and MIS contingent earnout payments and purchase accounting fair value adjustments to unwind deferred revenue for MIS and DPSS. iii.
Redwire incurred acquisition costs including due diligence, integration costs and additional expenses related to pre-acquisition activity. ii. Redwire recorded adjustments related to the impact of recognizing deferred revenue at fair value as part of the purchase accounting for previous acquisitions. iii. Redwire incurred severance costs related to separation agreements entered into with former employees. iv.
The Company evaluates its intangible assets for impairment when events or changes in circumstances indicate that the carrying amount of an asset or asset group may not be recoverable, in accordance with ASC 360, Property, Plant, and Equipment (“ASC 360”) and ASC 350, Intangibles—Goodwill and Other (“ASC 350”).
The Company evaluates its intangible and long-lived Page 49 Table of Contents assets for impairment when events or changes in circumstances indicate that the carrying value of an asset or asset group may be impaired.
For the year ended December 31, 2022, $109.8 million of the contracts awarded balance relates to acquired contract value from the Space NV acquisition. For the year ended December 31, 2021, $41.5 million of the contracts awarded balance relates to acquired contract value from the Oakman, DPSS and Techshot acquisitions.
For the LTM ended December 31, 2022, contracts awarded includes $109.8 million of acquired contract value from the Space NV acquisition, which was completed in the fourth quarter of 2022.
Significant fluctuations in working capital could adversely impact the Company’s cash position and short-term liquidity needs. Our medium-term to long-term cash requirements are to service and repay debt, expand our breadth and footprint through acquisitions as well as invest in facilities, equipment, technologies, and research and development for our growth initiatives.
Our primary requirements for liquidity and capital are for the Company’s material cash requirements, including working capital needs, satisfaction of our indebtedness and contractual commitments, investment in expanding our breadth and footprint through acquisitions as well as investment in facilities, equipment, technologies, and research and development for our growth initiatives and general corporate needs.
Amounts presented for the year ended December 31, 2021 were previously reported under capital market and advisory fees. ix. Redwire adjusted the fair value of the private warrant liability with changes in fair value recognized as a gain or loss during the respective periods. x.
Redwire adjusted the private warrant liability to reflect changes in fair value recognized as a gain or loss during the respective periods. x.
An EAC includes all direct costs and indirect costs directly attributable to a program or allocable based on our program cost pooling arrangements. Estimates regarding the Company’s cost associated with the design, manufacture and delivery of products and services are used in determining the EAC.
Under the cost-to-cost method, revenue is recognized based on the proportion of total costs incurred to total estimated costs-at-completion (“EAC”). An EAC includes all direct costs and indirect costs directly attributable to a program or allocable based on our program cost pooling arrangements.
Committed Equity Facility On April 14, 2022, the Company entered into an $80.0 million common stock purchase agreement (“Purchase Agreement”) with B. Riley Principal Capital, LLC (“B. Riley”) to further support its growth strategy through initiatives such as accretive acquisitions and internal investments, to bolster working capital, and/or for general corporate purposes.
Indebtedness Please refer to Note J – Debt of the accompanying notes to the consolidated financial statements for additional information related to the Company’s debt obligations. Committed Equity Facility On April 14, 2022, the Company entered into an $80.0 million common stock Purchase Agreement (the “Purchase Agreement”) with B. Riley Principal Capital, LLC (“B. Riley”).
Contingent Earnout Expense Contingent earnout expenses decreased $11.3 million, or 100%, for the year ended December 31, 2022 compared to the year ended December 31, 2021.
Impairment Expense Impairment expense decreased $96.6 million or 100% for the year ended December 31, 2023, as compared to the year ended December 31, 2022. There was no impairment charge recognized during the year ended December 31, 2023.
The goodwill reflects the potential synergies and expansion of the Company’s offerings across product lines and markets complementary to its existing products and markets. The Company assesses goodwill for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment.
Our goodwill and indefinite-lived intangible assets are allocated to and tested for impairment at the reporting unit level, which is defined as an operating segment or one level below an operating segment.
If the Company determines that the carrying amount of an asset or asset group is not recoverable based upon the undiscounted expected future cash flows of the asset or asset group, the Company records an impairment loss equal to the excess of carrying amount over the estimated fair value of the asset or asset group.
If the asset or asset group’s carrying value exceed the sum of undiscounted cash flows, the Company records an impairment loss equal to the excess of carrying amount over the estimated fair value of the asset or asset group. During 2023, the Company identified no triggering events and therefore, no impairment assessment was performed on its intangible and long-lived assets.
Other (Income) Expense, net Other (income) expense, net increased $12.2 million, or 319%, for the year ended December 31, 2022 compared to the year ended Page 53 Table of Contents December 31, 2021.
Other (Income) Expense, net Other (income) expense, net decreased from net other income to net other expense by $17.6 million, for the year ended December 31, 2023, as compared to the year ended December 31, 2022.
The change in net working capital was largely driven by the increases in accounts receivable of $6.8 million, contract assets of $5.0 million, and prepaid insurance of $2.8 million, and decreases in deferred revenue of $4.5 million and notes payable of $0.6 million, partially offset by the increase in accounts payable and accrued expenses of $10.4 million.
The change was primarily due to a decrease of $30.2 million in cash used related to the Company’s net loss and non-cash adjustments for the year ended December 31, 2023 in comparison to the same period in 2022 and an increase in cash provided by working capital related to increases in deferred revenue of $22.7 million partially offset by an increase in contract assets and accounts receivable of $5.4 million and $5.6 million, respectively, and a decrease in accounts payable and accrued expenses of $3.3 million.
The year-over-year increase in revenues was primarily driven by $8.8 million of contributed revenue from the Techshot acquisition and $11.7 million of contributed revenue from the Space NV acquisition as well as changes in contract mix and the timing of product deliveries in the deployables and engineering solutions space.
The year-over-year increase in revenues was driven by an increase of $43.3 million in contributed revenue from the Space NV Acquisition. Additionally, the increase was partially due to changes in contract mix, increase in average contract size and increased volume of production in the power generation and microgravity payloads.

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