ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
(State or Other Jurisdiction of Incorporation or Organization) |
(I.R.S. Employer Identification No.) | |
(Address of Principal Executive Offices) |
(Zip Code) |
Title of each class |
Trading Symbol(s) |
Name of each exchange on which registered | ||
one-fifth of one redeemable warrant |
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Large accelerated filer | ☐ | Accelerated filer | ☐ | |||
Non-accelerated filer |
☒ | Smaller reporting company | ||||
Emerging growth company |
Auditor PCAOB ID Number: |
Auditor Name: |
Auditor Location: |
Page |
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PART I |
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Item 1. |
Business | 2 | ||||
Item 1A. |
Risk Factors | 12 | ||||
Item 1B |
Unresolved Staff Comments | 43 | ||||
Item 2. |
Properties | 44 | ||||
Item 3. |
Legal Proceedings | 44 | ||||
Item 4. |
Mine Safety Disclosures | 44 | ||||
PART II |
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Item 5. |
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities | 45 | ||||
Item 6. |
[Reserved] | 45 | ||||
Item 7. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations | 46 | ||||
Item 7A. |
Quantitative and Qualitative Disclosures About Market Risk | 48 | ||||
Item 8. |
Financial Statements and Supplementary Data | 48 | ||||
Item 9. |
Changes in and Disagreements With Accountants on Accounting and Financial Disclosure | 48 | ||||
Item 9A. |
Controls and Procedures | 48 | ||||
Item 9B. |
Other Information | 49 | ||||
Item 9C. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections | 49 |
PART III |
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Item 10. |
Directors, Executive Officers and Corporate Governance | 50 | ||||
Item 11. |
Executive Compensation | 53 | ||||
Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters | 53 | ||||
Item 13. |
Certain Relationships and Related Transactions, and Director Independence | 54 | ||||
Item 14. |
Principal Accountant Fees and Services | 57 | ||||
PART IV |
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Item 15. |
Exhibits, Financial Statement Schedules | 58 | ||||
Item 16 |
Form 10-K Summary | 58 |
• | We are a recently incorporated company with a limited operating history and no revenues, and you have no basis on which to evaluate our ability to achieve our business objective. |
• | Our independent registered public accounting firm’s report contains an explanatory paragraph that expresses substantial doubt about our ability to continue as a “going concern.” |
• | Our public stockholders may not be afforded an opportunity to vote on our proposed initial business combination, which means we may complete our initial business combination even though a majority of our public stockholders do not support such a combination. |
• | If we seek stockholder approval of our initial business combination, our sponsor and our directors, officers and advisors have agreed to vote in favor of such initial business combination, regardless of how our public stockholders vote. |
• | If we seek stockholder approval of our initial business combination and we do not conduct redemptions pursuant to the tender offer rules, and if you or a “group” of stockholders are deemed to hold in excess of 15% of our Class A common stock, you will lose the ability to redeem all such shares in excess of 15% of our Class A common stock. |
• | As the number of special purpose acquisition companies evaluating targets has increased, attractive targets may become scarcer and there may be more competition for attractive targets. This could increase the cost of our initial business combination and could even result in our inability to find a target or to consummate an initial business combination. |
• | Changes in the market for directors and officers liability insurance could make it more difficult and more expensive for us to negotiate and complete an initial business combination. |
• | Nasdaq may delist our securities from trading on its exchange, which could limit investors’ ability to make transactions in our securities and subject us to additional trading restrictions. |
• | We previously received a notice of failure to satisfy a continued listing rule from Nasdaq, and while we have since regained compliance with the listing rule, we may in the future fail to comply with applicable Nasdaq rules. |
• | Your only opportunity to affect the investment decision regarding a potential business combination will be limited to the exercise of your right to redeem your shares from us for cash, unless we seek stockholder approval of the initial business combination. |
• | The ability of our public stockholders to redeem their shares for cash may make our financial condition unattractive to potential business combination targets, which may make it difficult for us to enter into an initial business combination with a target. |
• | The ability of our public stockholders to exercise redemption rights with respect to a large number of our shares may not allow us to complete the most desirable business combination or optimize our capital structure. |
• | The ability of our public stockholders to exercise redemption rights with respect to a large number of our shares could increase the probability that our initial business combination would be unsuccessful and that you would have to wait for liquidation in order to redeem your stock. |
• | The requirement that we complete our initial business combination within the prescribed timeframe may give potential target businesses leverage over us in negotiating an initial business combination and may decrease our ability to conduct due diligence on potential business combination targets as we approach our dissolution deadline, which could undermine our ability to complete our initial business combination on terms that would produce value for our stockholders. |
• | We may not be able to complete our initial business combination within the prescribed timeframe, in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate, in which case our public stockholders may only receive $10.00 per share, or less than such amount in certain circumstances, and our warrants will expire worthless. |
• | If we seek stockholder approval of our initial business combination, our sponsor, directors, officers, advisors and their affiliates may elect to purchase public shares or warrants from public stockholders, which may influence a vote on a proposed initial business combination and reduce the public “float” of our Class A common stock or warrants. |
• | If a stockholder fails to receive notice of our offer to redeem our public shares in connection with our initial business combination, or fails to comply with the procedures for tendering its shares, such shares may not be redeemed. |
• | Our search for a business combination, and any target business with which we ultimately consummate a business combination, may be materially adversely affected by the ongoing coronavirus (COVID-19) pandemic and the status of debt and equity markets. |
• | You will not have any rights or interests in funds from the trust account, except under certain limited circumstances. To liquidate your investment, therefore, you may be forced to sell your public shares or warrants, potentially at a loss. |
• | You will not be entitled to protections normally afforded to investors of many other blank check companies. |
• | Our warrants are accounted for as liabilities and the changes in value of our warrants could have an adverse effect on the market price of our Class A common stock or make it more difficult for us to consummate an initial business combination. |
• | We have identified a material weakness in our internal control over financial reporting. This material weakness could continue to adversely affect our ability to report our results of operations and financial condition accurately and in a timely manner. |
• | We may face litigation and other risks as a result of the material weakness in our internal control over financial reporting. |
• | Because of our special purpose acquisition company structure and limited resources and the significant competition for business combination opportunities, it may be more difficult for us to complete our initial business combination. If we do not complete our initial business combination, our public stockholders may receive only approximately $10.00 per share on our redemption of our public shares, or less than such amount in certain circumstances, and our warrants will expire worthless. |
• | our ability to select an appropriate target business or businesses; |
• | our ability to complete our initial business combination, particularly given competition from other blank check companies and financial and strategic buyers; |
• | our ability to continue as a going concern; |
• | our expectations around the performance of the prospective target business or businesses, including competitive prospects of the business following our initial business combination; |
• | our success in retaining or recruiting, or changes required in, our officers, key employees or directors following our initial business combination; |
• | our officers and directors allocating their time to other businesses and potentially having conflicts of interest with our business or in approving our initial business combination; |
• | our potential ability to obtain additional financing to complete our initial business combination; |
• | our pool of prospective target businesses; |
• | our ability to consummate an initial business combination amidst the uncertainty resulting from the ongoing COVID-19 pandemic, the economy and any business or businesses with which we consummate our initial business combination; |
• | the ability of our officers and directors to generate a number of potential acquisition opportunities; |
• | our public securities’ potential liquidity and trading; |
• | the lack of a market for our securities; |
• | our ability to remain in compliance with Nasdaq listing rules; |
• | the use of proceeds not held in the trust account or available to us from interest income on the trust account balance; |
• | the trust account not being subject to claims of third parties; or |
• | our financial performance. |
Item 1. |
Business. |
• | Rapid Technological Innovation and Adoption Drives Expansion of Attack Surface: re-platforming of consumer and enterprise technologies such as cloud computing, digital identities, mobile devices, blockchain, artificial intelligence, social networks, satellites, digitalization of supply chains, IoT devices and drones have fundamentally changed the way we live, work and play. This rapid technological innovation exponentially expands the attack surface for adversaries to capitalize on, resulting in the need for new, innovative CSSP products and solutions. |
• | Rise of Financially and Ideologically Motivated Adversaries: at-scale attacks and emboldened threat actors to step up hacktivism, cybercrime, espionage, terrorism and cyber warfare. |
• | Widely Available Markets for Attacker Tools: low-cost and efficient way for attackers to achieve their goals. |
• | Geopolitical Tensions: |
• | Lack of Innovation from Existing Vendors: best-of-breed |
• | Increasing Regulation: |
• | Massive Skills Shortage: |
• | COVID-19: COVID-19 pandemic has caused institutions to fundamentally re-evaluate their organizational processes and business models, leading to a massive increase in remote work and use of distributed technology applications and systems. These changes have caused a corresponding increase in the vulnerability of employees accessing mission critical applications, essential IT systems and sensitive data from unprotected locations. The changing nature of work driven by the pandemic is shaping new architectures and new priorities in spend, creating opportunities for CSSP companies to satisfy the demand for new security products and solutions. |
• | Recent Seminal Event: |
• | Cloud: |
• | Identity and Endpoint : |
• | Social and Digital: |
• | Consumer Privacy: |
• | Cryptocurrency and Blockchain: |
• | Artificial Intelligence and Machine Learning: |
• | Industrial and IoT: |
• | Supply Chain: |
• | Insider Threats: difficult-to-detect |
• | Drones: |
• | Satellite: |
• | where we can materially impact the value and growth of the company in partnership with management; |
• | where we can leverage networks of founders, operators, investors and advisors; |
• | where we have a differentiated view on the ability of the target to create value as a public company; |
• | where we can address a large market capitalizing on trends within the CSSP industry; |
• | that can serve as a platform for consolidation and growth; |
• | with a defensible market position and demonstrated advantages when compared to its competitors, and which creates barriers to entry against new competitors; |
• | which is at an inflection point (such as requiring additional management expertise) or that is able to innovate through new operational techniques; |
• | that is a fundamentally sound company and can leverage our expertise and relationships to achieve its full potential; |
• | which may be undergoing a transition to subscription or SaaS models; |
• | which is exhibiting unrecognized value or other characteristics, desirable returns on capital, and a need for capital to achieve the company’s growth strategy that we believe has been misevaluated by the marketplace based on our analysis and due diligence review; |
• | that would offer an attractive risk-adjusted return for our stockholders, potential upside from growth in the target business and an improved capital structure that would be weighed against any identified downside risks; and |
• | that could benefit from being a publicly traded company, could rapidly ramp its readiness to be a public company, and could utilize access to broader capital markets. |
• | partnership with our management team members who have extensive and proven track records of founding, operating, advising, and investing in market-leading software and CSSP companies; |
• | access to our network of advisors, investors, C-level executives, CISOs and former senior intelligence officers from the United States, the United Kingdom and Israel; |
• | increased visibility with customers; |
• | higher engagement with core, relevant, fundamental investors as anchor stockholders than a traditional IPO bookbuilding process would offer; |
• | lower risk and expedited path to a public listing with an infusion of cash and ongoing access to public capital markets; |
• | listed public company stock currency for future acquisitions; |
• | ability for management to retain control and focus on growing the business; and |
• | opportunity to motivate and retain employees using stock-based compensation with public company stock. |
Conventional SPAC |
NightDragon SCALE |
NightDragon SCALE’s Advantages | ||
• Sponsor’s promote represents 20% of the common stock issued and outstanding • All founder shares vested, no performance-based test |
• Promote consists of Class B common stock, representing approximately 20% of our shares of common stock outstanding, will vest in four equal tranches as described below • 25% of the Class B common stock will convert to shares of Class A common stock upon the consummation of our initial business combination, with the remaining 75% converting in three equal tranches upon the achievement of Class A common stock price milestones of $12.00, $15.00 and $20.00 per share for 20 trading days within a 30-trading day period following our initial business combination (but only prior to the 10 year anniversary of our initial business combination)• The Class B common stock will also convert to Class A common stock upon the consummation of a strategic transaction following our initial business combination if the effective price per share of Class A common stock is at least equal to $12.00 in such transaction • Any portion of the Class B common stock not converted before the 10th anniversary of our initial business combination will be automatically forfeited for no consideration |
• Less dilution to the target business absent post-business combination share price performance • Downside and upside are shared with investors because our sponsor’s economics from the founder shares only fully reach the level of a conventional SPAC with 20% founder shares when the stock trades at or above $20.00 per share for the predetermined number of days or in connection with the consummation of certain strategic transactions following our initial business combination • Vesting thresholds create longer-term incentives |
• | restrictions on the nature of our investments; and |
• | restrictions on the issuance of securities, each of which may make it difficult for us to complete our initial business combination. |
• | registration as an investment company with the Securities and Exchange Commission; |
• | adoption of a specific form of corporate structure; and |
• | reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations to which we are currently not subject. |
• | $12.00 per share (as adjusted for stock splits, stock dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period, or the First Price Vesting; |
• | $15.00 per share (as adjusted for stock splits, stock dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period, or the Second Price Vesting; and |
• | $20.00 per share (as adjusted for stock splits, stock dividends, rights issuances, subdivisions, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period, or the Third Price Vesting. |
• | may significantly dilute the equity interest of investors in our initial public offering; |
• | may subordinate the rights of holders of Class A common stock if preferred stock is issued with rights senior to those afforded our Class A common stock; |
• | could cause a change of control if a substantial number of shares of our Class A common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; |
• | may adversely affect prevailing market prices for our SCALE units, Class A common stock and/or warrants; |
• | may have the effect of delaying or preventing a change of control of us by diluting the share ownership or voting rights of a person seeking to obtain control of us; and |
• | may not result in adjustment to the exercise price of our warrants |
• | default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations; |
• | acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant; |
• | our immediate payment of all principal and accrued interest, if any, if the debt is payable on demand; |
• | our inability to obtain necessary additional financing if the debt contains covenants restricting our ability to obtain such financing while the debt is outstanding; |
• | our inability to pay dividends on our Class A common stock; |
• | using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our Class A common stock if declared, and will reduce our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes; |
• | limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate; |
• | increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation; |
• | limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy; and |
• | other disadvantages compared to our competitors who have less debt. |
• | solely dependent upon the performance of a single business, property or asset, or |
• | dependent upon the development or market acceptance of a single or limited number of products, processes or services. |
• | a limited availability of market quotations for our securities; |
• | reduced liquidity for our securities; |
• | a determination that our Class A common stock is a “penny stock” which will require brokers trading in our Class A common stock to adhere to more stringent rules and possibly result in a reduced level of trading activity in the secondary trading market for our securities; |
• | a limited amount of news and analyst coverage; and |
• | a decreased ability to issue additional securities or obtain additional financing in the future. |
• | the history and prospects of companies whose principal business is the acquisition of other companies; |
• | prior offerings of those companies; |
• | our prospects for acquiring an operating business; |
• | a review of debt to equity ratios in leveraged transactions; |
• | our capital structure; |
• | an assessment of our management and their experience in identifying operating companies; |
• | general conditions of the securities markets at the time of our initial public offering; and |
• | other factors as were deemed relevant. |
• | we have a board that includes a majority of “independent directors,” as defined under the rules of Nasdaq; |
• | we have a compensation committee of our board that is comprised entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities; and |
• | to the extent we have one, we have a nominating and corporate governance committee of our board that is comprised entirely of independent directors with a written charter addressing the committee’s purpose and responsibilities. |
• | higher costs and difficulties inherent in managing cross-border business operations and complying with different commercial and legal requirements of overseas markets; |
• | rules and regulations regarding currency redemption; |
• | complex corporate withholding taxes on individuals; |
• | laws governing the manner in which future business combinations may be effected; |
• | tariffs and trade barriers; |
• | regulations related to customs and import/export matters; |
• | longer payment cycles and challenges in collecting accounts receivable; |
• | tax issues, including but not limited to tax law changes and variations in tax laws as compared to the United States; |
• | currency fluctuations and exchange controls; |
• | rates of inflation; |
• | cultural and language differences; |
• | employment regulations; |
• | data privacy; |
• | changes in industry, regulatory or environmental standards within the jurisdictions where we operate; |
• | public health or safety concerns and governmental restrictions, including those caused by outbreaks of pandemic disease such as the COVID-19 pandemic; |
• | crime, strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars; |
• | deterioration of political relations with the United States; and |
• | government appropriations of assets. |
Item 1B. |
Unresolved Staff Comments. |
Item 2. |
Properties. |
Item 3. |
Legal Proceedings. |
Item 4. |
Mine Safety Disclosures. |
Item 5. |
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. |
Item 6. |
[Reserved.] |
Item 7. |
Management’s Discussion and Analysis of Financial Condition and Results of Operations. |
Item 7A. |
Quantitative and Qualitative Disclosures about Market Risk |
Item 8. |
Financial Statements and Supplementary Data |
Item 9. |
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure |
Item 9A. |
Controls and Procedures. |
Item 9B. |
Other Information. |
Item 9C. |
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections |
Item 10. |
Directors, Executive Officers and Corporate Governance. |
Name |
Age |
Title | ||
David G. DeWalt | 57 | Director, Chairman of the Board of Directors | ||
Mark Garrett | 64 | Director, Vice Chairman of the Board of Directors(1)(2)(3) | ||
Kenneth Gonzalez | 52 | Director(1)(2)(3) | ||
Barbara Massa | 49 | Director(1) | ||
Morgan Kyauk | 37 | Chief Executive Officer and Corporate Secretary | ||
Steve Simonian | 55 | Chief Financial Officer |
(1) | Member of the audit committee |
(2) | Member of the compensation committee |
(3) | Member of the nominating and corporate governance committee |
• | selecting, retaining, compensating, evaluating, overseeing and, where appropriate, terminating our independent registered public accounting firm; |
• | reviewing and approving the scope and plans for the audits and the audit fees and approve all non-audit and tax services to be performed by the independent audit; |
• | evaluating the independence and qualification of the independent registered public accounting firm; |
• | reviewing internal controls and integrity of financial statements; |
• | reviewing financial information presentation, earnings press releases and guidance; |
• | overseeing the design, implementation and performance of our internal audit function, if any; |
• | setting hiring policies with regard to the hiring of employees and former employees of our independent auditor and oversee compliance with such policies; |
• | reviewing, approving and monitoring related party transactions; |
• | adopting and overseeing procedures to address complaints regarding accounting, internal accounting controls or auditing matters; |
• | reviewing and discussing with our management and the independent auditor our compliance with various laws; |
• | reviewing and discussing with management our independent auditor guidelines and policies to identify, monitor, and address enterprise risks; |
• | engaging independent legal, accounting and other advisors; |
• | providing appropriate funding for compensation to independent registered accounting firm, advisors and related expenses; and |
• | reviewing the adequacy of the audit committee charter and recommend any proposed changes to our board of directors. |
• | should have demonstrated notable or significant achievements in business, education or public service; |
• | should possess the requisite intelligence, education and experience to make a significant contribution to the board of directors and bring a range of skills, diverse perspectives and backgrounds to its deliberations; and |
• | should have the highest ethical standards, a strong sense of professionalism and intense dedication to serving the interests of the stockholders. |
• | reviewing and approving the corporate goals and objectives applicable to the compensation of our chief executive officer; |
• | reviewing and approving the compensation and benefits for our executive officers; |
• | reviewing, approving, and administering employee compensation plans; |
• | advising on proposals to stockholders on executive compensation matters; |
• | overseeing compensation plans and programs; |
• | reviewing and discussing our compensation policies and practices and the risks related thereto; |
• | monitoring compliance with any stock ownership guidelines; |
• | approving the creation or revision of any clawback policy allowing us to recoup compensation paid to employees; |
• | overseeing regulatory compliance with respect to compensation matters; |
• | retaining or obtaining the advice of compensation consultants; and |
• | reviewing the adequacy of the compensation committee charter and recommend any proposed changes to our board of directors. |
Item 11. |
Executive Compensation. |
Item 12. |
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters. |
• | each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock; |
• | each of our executive officers and directors that beneficially owns shares of our common stock; and |
• | all our executive officers and directors as a group. |
Class A Common Stock |
Class B Common Stock(1) |
Approximate Percentage of Outstanding Common Stock |
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Name and Address of Beneficial Owner |
Number of Shares Beneficially Owned |
Approximate Percentage of Class |
Number of Shares Beneficially Owned |
Approximate Percentage of Class |
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5% Beneficial Owners |
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NightDragon Acquisition Sponsor, LLC(2) |
1,035,000 | 2.9 | % | 8,625,000 | 100 | % | 21.9 | % | ||||||||||||
David G. DeWalt(2) |
1,035,000 | 2.9 | % | 8,625,000 | 100 | % | 21.9 | % | ||||||||||||
Integrated Core Strategies (US) LLC(3) |
2,061,808 | 5.8 | % | — | * | 4.66 | % | |||||||||||||
Directors and Named Executive Officers |
||||||||||||||||||||
David G. DeWalt(2) |
1,035,000 | 2.9 | % | 8,625,000 | 100 | % | 21.9 | % | ||||||||||||
Ken Gonzalez |
— | * | — | * | ||||||||||||||||
Mark Garrett |
— | * | — | * | ||||||||||||||||
Morgan Kyauk |
— | * | — | * | ||||||||||||||||
Steve Simonian |
— | * | — | * | ||||||||||||||||
Barbara Massa |
— | * | — | * | ||||||||||||||||
All officers and directors as a group (6 individuals) |
1,035,000 | 2.9 | % | 8,625,000 | 100 | % | 21.9 | % |
* | Less than one percent. |
(1) | Shares of our Class B common stock will convert into shares of our Class A common stock only upon the occurrence of certain triggering events, one of which will occur upon the consummation of our initial business combination, three of which will be based on shares of our Class A common stock trading at $12.00, $15.00 and $20.00 per share following our initial business combination, and one of which will be based upon a specified strategic transaction following our initial business combination if the effective price per share of our Class A common stock is at least equal to $12.00 in such transaction, in each case prior to the 10th anniversary of our initial business combination. |
(2) | NightDragon Acquisition Sponsor, LLC, our sponsor, is the record holder of all of our Class B common stock. Each of our officers, directors and advisors is, directly or indirectly, a member of our sponsor. Our sponsor is governed by its managers, David G. DeWalt and Morgan Kyauk. The managers of our sponsor may be removed by a majority in interest of our sponsor’s Class M members, and as such, Mr. DeWalt has voting and investment discretion with respect to the shares of common stock held of record by our sponsor and may be deemed to have shared beneficial ownership of the shares of common stock held directly by our sponsor. |
(3) | The business address of this entity is 399 Park Avenue, New York, New York 10022. Information was derived from a Schedule 13G/A jointly filed on January 18, 2022 by Integrated Core Strategies (US) LLC (“ICS”), Riverview Group LLC (“Riverview”), ICS Opportunities II LLC (“ICSO II”), ICS Opportunities, Ltd. (“ICSO”), Millennium International Management LP (“MIM”), Millennium Management LLC (“MM”), Millennium Group Management LLC (“MGM”) and Israel A. Englander, a United States citizen (“Englander”) (collectively, the “Reporting Persons”) with respect to an aggregate of 2,061,808 shares of Class A common stock beneficially owned by the Reporting Persons. MIM is the investment manager to ICSO II and ICS Opportunities and may be deemed to have shared voting control and investment discretion over securities owned by ICSO II and ICSO. MM is the general partner of the managing member of ICS and Riverview. MM is also the general partner of the 100% owner of ICSO II and ICSO and may also be deemed to have shared voting control and investment discretion over securities owned by ICSO II and ICSO. MGM is the managing member of MM and may also be deemed to have shared voting control and investment discretion over securities owned by ICS and Riverview. MGM is also the general partner of MIM and may also be deemed to have shared voting control and investment discretion over securities owned by ICSO II and ICSO. The managing member of MGM is a trust of which Englander currently serves as the sole voting trustee. Therefore, Englander may also be deemed to have shared voting control and investment discretion over securities owned by ICS, Riverview, ICSO II and ICSO. |
• | Reimbursement for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination; and |
• | Repayment of loans which may be made by our sponsor or an affiliate of our sponsor or certain of our officers and directors to finance transaction costs in connection with an intended initial business combination, the terms of which have not been determined nor have any written agreements been executed with respect thereto. Up to $1,500,000 of such loans may be convertible into SCALE units at a price of $10.00 per SCALE unit. |
Item 14 . |
Principal Accountant Fees and Services. |
Item 15 . |
Exhibits, Financial Statement Schedules |
(a) | The following documents are filed as part of this Form 10-K: |
(1) | Financial Statements: |
Page | ||
59 | ||
60 | ||
61 | ||
62 | ||
63 | ||
64 |
(2) | Financial Statement Schedules: |
(3) | Exhibits |
Item 16. |
Form 10-K Summary |
December 31, |
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2021 |
2020 |
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ASSETS |
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Current Assets |
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Cash |
$ | $ | ||||||
Prepaid expenses |
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Total Current Assets |
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Deferred offering costs |
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Long Term Portion of Prepaid Insurance |
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Marketable securities held in Trust Account |
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TOTAL ASSETS |
$ |
$ |
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LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY |
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Current Liabilities |
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Accrued expenses |
$ | $ | ||||||
Accrued offering costs |
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Total Current Liabilities |
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Warrant liability |
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Deferred underwriting fee payable |
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Total Liabilities |
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Commitments |
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Class A common stock subject to possible redemption, at December 31, 2021 at redemption value of $ |
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|||||
Stockholders’ (Deficit) Equity |
||||||||
Preferred stock, $ |
||||||||
Class A common stock, $ |
||||||||
Class B common stock, $ |
||||||||
Additional paid-in capital |
||||||||
Accumulated deficit |
( |
) | ||||||
|
|
|
|
|||||
Total Stockholders’ (Deficit) Equity |
||||||||
|
|
|
|
|||||
TOTAL LIABILITIES AND STOCKHOLDERS’ (DEFICIT) EQUITY |
$ |
$ |
||||||
|
|
|
|
Year Ended December 31, |
For the Period from December 8, 2020 (inception) through December 31, |
|||||||
2021 |
2020 |
|||||||
General and administrative expenses |
$ | $ | ||||||
|
|
|
|
|||||
Loss from operations |
( |
) |
( |
) | ||||
Other income: |
||||||||
Interest earned on marketable securities held in Trust Account |
||||||||
Change in fair value of warrant liability |
||||||||
Transaction costs incurred in connection with warrant liabilities |
( |
) | ||||||
Compensation expense — warrants |
( |
) | ||||||
|
|
|
|
|||||
Other income, net |
||||||||
|
|
|
|
|||||
|
|
|
|
|||||
Net income (loss) |
$ |
$ |
( |
) | ||||
|
|
|
|
|||||
Basic and diluted weighted average shares outstanding, Class A common stock |
||||||||
|
|
|
|
|||||
Basic and diluted net income per share, Class A common stock |
$ |
$ |
||||||
|
|
|
|
|||||
Basic weighted average shares outstanding, Class B common stock |
||||||||
|
|
|
|
|||||
Basic net income (loss) per share, Class B common stock |
$ |
$ |
( |
) | ||||
|
|
|
|
|||||
Diluted weighted average shares outstanding, Class B common stock |
||||||||
|
|
|
|
|||||
Diluted net income per share, Class B common stock |
$ |
$ |
||||||
|
|
|
|
Class A Common Stock |
Class B Common Stock |
Additional Paid-in Capital |
Accumulated Deficit |
Total Stockholders’ |
||||||||||||||||||||||||
Shares |
Amount |
Shares |
Amount |
Equity (Deficit) |
||||||||||||||||||||||||
Balance – December 8, 2020 (Inception) |
$ | $ | — | $ | $ | $ | ||||||||||||||||||||||
Issuance of Class B Common Stock to Sponsor |
— | — | — | |||||||||||||||||||||||||
Net loss |
— | — | — | — | — | ( |
) | ( |
) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance – December 31, 2020 |
$ |
$ |
$ |
$ |
( |
) |
||||||||||||||||||||||
Accretion for Class A ordinary shares to redemption amount |
— |
— |
— |
— |
( |
) | ( |
) | ( |
) | ||||||||||||||||||
Sale of 1,035,000 Private Placement Units |
— |
— |
— |
|||||||||||||||||||||||||
Net income |
— | — | — | — | — | |||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||
Balance – December 31, 2021 |
$ |
$ |
$ |
$ |
( |
) |
$ |
( |
) | |||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year Ended December 31, |
For the Period from December 8, 2020 (inception) through December 31, |
|||||||
2021 |
2020 |
|||||||
Cash Flows from Operating Activities: |
||||||||
Net income (loss) |
$ | $ | ( |
) | ||||
Adjustments to reconcile net income (loss) to net cash used in operating activities: |
||||||||
Interest earned on marketable securities held in Trust Account |
( |
) | ||||||
Change in fair value of warrant liability |
( |
) | ||||||
Transaction costs associated with Initial Public Offering |
||||||||
Compensation expense |
||||||||
Changes in operating assets and liabilities: |
||||||||
Prepaid expenses |
( |
) | ||||||
Accrued expenses |
||||||||
Net cash used in operating activities |
( |
) |
||||||
Cash Flows from Investing Activities: |
||||||||
Investment of cash in Trust Account |
( |
) | ||||||
Net cash used in investing activities |
( |
) |
||||||
Cash Flows from Financing Activities: |
||||||||
Proceeds from issuance of Class B common stock to Sponsor |
— | |||||||
Proceeds from sale of Units, net of underwriting discounts paid |
— | |||||||
Proceeds from sale of Private Placement Units |
— | |||||||
Proceeds from promissory note – related party |
— | |||||||
Repayment of promissory note – related party |
( |
) | — | |||||
Payment of offering costs |
( |
) | — | |||||
Net cash provided by financing activities |
||||||||
Net Change in Cash |
||||||||
Cash – Beginning |
||||||||
Cash – Ending |
$ |
$ |
||||||
Supplemental disclosure of non-cash investing and financing activities: |
||||||||
Offering costs included in accrued offering costs |
$ | $ | ||||||
Accretion for initial redemption value |
$ | $ | ||||||
Deferred underwriting fee payable |
$ | $ | ||||||
(1) | As restated for Class A common stock subject to redemption |
Gross proceeds |
$ | |||
Less: |
||||
Proceeds allocated to Public Warrants |
( |
) | ||
Class A common stock issuance costs |
( |
) | ||
Plus: |
||||
Accretion of carrying value to redemption value |
||||
|
|
|||
Class A common stock subject to possible redemption |
$ | |||
|
|
Year Ended December 31, 2021 |
For the Period from December 8, 2020 (inception) through December 31, 2020 |
|||||||||||||||
Class A |
Class B |
Class A |
Class B |
|||||||||||||
Basic and diluted net income (loss) per common stock |
||||||||||||||||
Numerator: |
||||||||||||||||
Allocation of net income (loss), as adjusted |
$ | $ | $ | $ | ( |
) | ||||||||||
Denominator: |
||||||||||||||||
Basic weighted average shares outstanding |
||||||||||||||||
Basic and diluted net income (loss) per common stock |
$ | $ | $ | $ | ( |
) |
Year Ended December 31, 2021 |
For the Period from December 8, 2020 (inception) through December 31, 2020 |
|||||||||||||||
Class A |
Class B |
Class A |
Class B |
|||||||||||||
Basic net income per common stock |
||||||||||||||||
Numerator: |
||||||||||||||||
Allocation of net income, as adjusted |
$ | $ | $ | — | $ | — | ||||||||||
Denominator: |
||||||||||||||||
Diluted weighted average shares outstanding |
— | — | ||||||||||||||
Diluted net income per common stock |
$ | $ | $ | — | $ | — |
• | Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; |
• | Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and |
• | Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. |
• | in whole and not in part; |
• | at a price of $ |
• | upon not less than |
• | if, and only if, the closing price of the Class A common stock equals or exceeds $ a period ending on the third trading day prior to the date on which the Company sends the notice of redemption to the warrant holders. |
• | in whole and not in part; |
• | at $ |
• | if, and only if, the closing price of our Class A common stock equals or exceeds $ |
December 31, 2021 |
December 31, 2020 |
|||||||
Deferred tax assets (liability) |
||||||||
Net operating loss carryforward |
$ | $ | ||||||
Startup/Organization Expenses |
||||||||
Total deferred tax assets (liability) |
||||||||
Valuation Allowance |
( |
) | ( |
) | ||||
Deferred tax assets (liability) |
$ | $ | ||||||
December 31, 2021 |
December 31, 2020 |
|||||||
Federal |
||||||||
Current |
$ | $ | ||||||
Deferred |
( |
) | ( |
) | ||||
State and Local |
||||||||
Current |
||||||||
Deferred |
||||||||
Change in valuation allowance |
||||||||
Income tax provision |
$ | $ | ||||||
December 31, 2021 |
December 31, 2020 |
|||||||
Statutory federal income tax rate |
% | % | ||||||
State taxes, net of federal tax benefit |
% | % | ||||||
Deferred tax liability change in rate |
|
|
| |||||
Change in fair value of warrants |
% | % | ||||||
Transaction costs allocated to warrants |
% | % | ||||||
Fair value of private warrant liability in excess of proceeds |
% | % | ||||||
Prior year true up of tax carryover |
% | % | ||||||
Meals and entertainment |
% | % | ||||||
Valuation allowance |
% | ( |
)% | |||||
|
|
|
|
|||||
Income tax provision |
% | % | ||||||
|
|
|
|
Description |
Level |
December 31, 2021 |
||||||
Assets: |
||||||||
Marketable securities held in Trust Account |
1 | $ | ||||||
Liabilities: |
||||||||
Warrant Liability – Public Warrants |
1 | $ | ||||||
Warrant Liability – Private Placement Warrants |
3 | $ |
Input: |
December 31, 2021 |
March 4, 2021 (Initial Measurement) |
||||||
Risk-free interest rate |
% | % | ||||||
Expected term (years) |
||||||||
Expected volatility |
% | % | ||||||
Exercise price |
$ | $ | ||||||
Fair value of Units |
$ | $ |
Private Placement |
Public |
Warrant Liabilities |
||||||||||
Fair value as of December 31, 2020 |
$ | $ | $ | |||||||||
Initial measurement on March 4, 2021 |
||||||||||||
Change in fair value |
( |
) | ( |
) | ( |
) | ||||||
Transfer to Level 1 on June 30, 2021 |
— | ( |
) | ( |
) | |||||||
Fair value as of December 31, 2021 |
$ | $ | $ |
Incorporated by Reference |
||||||||||||||
Exhibit Number |
Description |
Form |
File No. |
Exhibit |
Filing Date |
|||||||||
3.1 |
S-1 |
333-252909 |
3.1 |
February 9, 2021 |
||||||||||
3.2 |
8-K |
001-40108 |
3.1 |
March 4, 2021 |
||||||||||
4.1 |
S-1/A |
333-252909 |
4.1 |
February 24, 2021 |
||||||||||
4.2 |
S-1/A |
333-252909 |
4.2 |
February 24, 2021 |
||||||||||
4.3 |
S-1/A |
333-252909 |
4.3 |
February 24, 2021 |
||||||||||
4.4 |
8-K |
001-40108 |
4.1 |
March 4, 2021 |
||||||||||
4.5* |
||||||||||||||
10.1 |
S-1/A |
333-252909 |
10.6 |
February 24, 2021 |
||||||||||
10.2 |
S-1 |
333-252909 |
10.7 |
February 9, 2021 |
||||||||||
10.3 |
S-1 |
333-252909 |
10.8 |
February 9, 2021 |
||||||||||
10.4 |
8-K |
001-40108 |
10.1 |
March 4, 2021 |
||||||||||
10.5 |
8-K |
001-40108 |
10.2 |
March 4, 2021 |
||||||||||
10.6 |
8-K |
001-40108 |
10.3 |
March 4, 2021 |
||||||||||
10.7 |
S-1 |
333-252909 |
10.3 |
February 9, 2021 |
||||||||||
10.8 |
8-K |
001-40108 |
10.4 |
March 4, 2021 |
||||||||||
24.1 |
||||||||||||||
31.1* |
||||||||||||||
31.2* |
||||||||||||||
32.1* |
||||||||||||||
32.2* |
||||||||||||||
101.INS |
Inline XBRL Instance Document |
|||||||||||||
101.SCH |
Inline XBRL Taxonomy Extension Schema Document |
|||||||||||||
101.CAL |
Inline XBRL Taxonomy Extension Calculation Linkbase Document |
|||||||||||||
101.DEF |
Inline XBRL Taxonomy Extension Definition Linkbase Document |
|||||||||||||
101.LAB |
Inline XBRL Taxonomy Extension Label Linkbase Document |
|||||||||||||
101.PRE |
Inline XBRL Taxonomy Extension Presentation Linkbase Document |
|||||||||||||
104 |
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) |
* |
Filed herewith. |
+ |
Indicates a management or compensatory plan. |
Dated: March 30, 2022 |
NightDragon Acquisition Corp. | |||||
/s/ Morgan Kyauk | ||||||
Morgan Kyauk | ||||||
Chief Executive Officer and Corporate Secretary |
Name |
Position |
Date | ||
/s/ Morgan Kyauk Morgan Kyauk |
Chief Executive Officer and Corporate Secretary (Principal Executive Officer) |
March 30, 2022 | ||
/s/ Steve Simonian Steve Simonian |
Chief Financial Officer (Principal Financial Officer and Principal Accounting Officer) |
March 30, 2022 | ||
/s/ David G. DeWalt David G. DeWalt |
Director and Chairman of the Board of Directors |
March 30, 2022 | ||
/s/ Mark Garrett Mark Garrett |
Director and Vice Chairman of the Board of Directors |
March 30, 2022 | ||
/s/ Kenneth Gonzalez Kenneth Gonzalez |
Director |
March 30, 2022 | ||
/s/ Barbara Massa Barbara Massa |
Director |
March 30, 2022 |