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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2021
OR
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 001-39733
rdw-20210930_g1.jpg
Redwire Corporation
(Exact name of registrant as specified in its charter)
Delaware
98-1550429
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)
                      8226 Philips Highway, Suite 101
Jacksonville, Florida
32256
(Address of Principal Executive Offices)
(Zip Code)
(650) 701-7722
Registrant's telephone number, including area code
Genesis Park Acquisition Corp
2000 Edwards Street, Suite B
Houston, TX 77007
(Former name, former address and former fiscal year, if changed since last report)
Securities registered pursuant to Section 12(b) of the Act:
Title of each classTrading Symbol(s)Name of each exchange on which registered
Common Stock, par value $0.0001 per shareRDWNew York Stock Exchange
Warrants, each to purchase one share of Common StockRDW WSNew York Stock Exchange
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports); and (2) has been subject to such filing requirements for the past 90 days.    Yes      No  
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes     No  
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):
Large accelerated filer
Accelerated filer
Non-accelerated filer  
Smaller reporting company
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant 13(a) of the Exchange Act. 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).     Yes        No  
The registrant had outstanding 62,690,869 shares of common stock as of March 23, 2022.


Table of Contents
REDWIRE CORPORATION
QUARTERLY REPORT ON FORM 10-Q
SEPTEMBER 30, 2021
TABLE OF CONTENTS
ITEMPage


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Table of Contents
PART I. FINANCIAL INFORMATION
Each of the terms the “Company,” “Redwire,” “we,” “our,” “us” and similar terms used herein refer collectively to Redwire Corporation, a Delaware corporation, and its consolidated subsidiaries, unless otherwise stated.
Information Relating to Forward Looking Statements
This Quarterly Report on Form 10-Q contains statements that constitute “forward looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995 concerning us and other matters. Words such as “will,” “expect,” “anticipate,” “intend,” “may,” “could,” “should,” “plan,” “project,” “forecast,” “believe,” “estimate,” “outlook,” “trends,” “goals,” “contemplate,” “continue,” “might,” “possible,” “potential,” “predict,” “would” and similar expressions generally identify these forward looking statements, but the absence of these words does not mean that a statement is not forward looking. Forward looking statements include, among other things, statements relating to our future financial condition, results of operations and/or cash flows, and our projects and related timelines. Forward looking statements are based upon assumptions, expectations, plans and projections that we believe to be reasonable when made, but which may change over time. These statements are not guarantees of future performance and inherently involve a wide range of risks and uncertainties that are difficult to predict.
Redwire believes it is important to communicate its expectations to its security holders. However, there may be events in the future that Redwire’s management is not able to predict accurately or over which Redwire has no control. The risk factors and cautionary language contained in this Quarterly Report on Form 10-Q, and other reports and documents filed by Redwire with the Securities and Exchange Commission (the “SEC”), provide examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations described in such forward looking statements, including among other things:

our limited operating history makes it difficult to evaluate our future prospects and the risks and challenges we may encounter;
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;
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;
if we are unable to successfully integrate 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;
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 not be able to convert orders in backlog into revenue;
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 issue or be registered, which could have a material adverse effect on our ability to prevent others from commercially exploiting projects similar to ours;
protecting and defending against intellectual property claims could have a material adverse effect on our business;
our business is subject to a wide variety of extensive and evolving government laws and regulations, and failure to comply with such laws and regulations could have a material adverse effect on our business;
we have government customers, which subjects us to risks including early termination, audits, investigations, sanctions and penalties;
data breaches or incidents involving our technology could damage our business, reputation and brand and substantially harm our business and results of operations;
we are highly dependent on our senior management team and other highly skilled personnel, and if we are not successful in attracting or retaining highly qualified personnel, we may not be able to successfully implement our business strategy;
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Table of Contents
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 that we may provide;
we will incur significant expenses and capital expenditures in the future to execute our business plan and we may be unable to adequately control our expenses;
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;
our ability to successfully implement our business plan will depend on a number of factors outside of our control;
our management has limited experience in operating a public company;
we may not be able to successfully develop our technology and services;
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;
the current pandemic outbreak of a novel strain of coronavirus, also known as COVID-19, may continue to disrupt and adversely affect 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;
we may not be able to adapt to and satisfy customer demands in a timely and cost-effective manner;
we may not be able to respond to commercial industry cycles in terms of cost structure, manufacturing capacity, and/or personnel needs;
any delays in the development, design, engineering and manufacturing of our products and services may adversely affect our business, financial condition and results of operations;
we may be adversely affected by other economic, business, and/or competitive factors;
we have identified material weaknesses in our internal control over financial reporting that, if not remediated, may not allow us to report our financial condition or results of operations accurately or timely;
we may be unable to meet stock exchange listing standards;
the benefits of the Merger (as defined herein) may not be realized to the extent currently anticipated by us, or at all. The ability to recognize any such benefits may be affected by, among other things, competition, the ability of us to grow and manage growth profitably, maintain relationships with customers and suppliers and retain our management and key employees;
the costs related to the Merger could be significantly higher than currently anticipated; and
substantial future sales or other issuances of our common stock could depress the market for our common stock.
Undue reliance should not be placed on these forward looking statements. The forward looking statements contained in this Quarterly Report on Form 10-Q are based on current expectations and beliefs concerning future developments and their potential effects on us. There can be no assurance that future developments affecting us will be those that we have anticipated. We do not undertake any obligation to update or revise any forward looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.



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ITEM 1. FINANCIAL STATEMENTS
REDWIRE CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(In thousands of U.S. dollars, except share data)
Successor
 September 30, 2021December 31, 2020
Assets
Current assets:
Cash and cash equivalents
$27,258 $22,076 
Accounts receivable, net
10,396 6,057 
Contract assets
9,364 4,172 
Inventory
607 330 
Income tax receivable
688 688 
Related party receivable
 4,874 
Prepaid insurance3,806  
Prepaid expenses and other current assets
1,855 1,109 
Total current assets
53,974 39,306 
Property, plant and equipment, net
4,830 3,262 
Goodwill
69,625 52,711 
Intangible assets, net
87,453 60,961 
Other non-current assets
125 534 
Total assets
$216,007 $156,774 
Liabilities and Equity
Current liabilities:
Accounts payable
$7,390 $7,158 
Notes payable to sellers
888 1,827 
Short-term debt, including current portion of long-term debt
3,827 1,074 
Accrued expenses
12,841 7,462 
Deferred revenue
11,737 15,665 
Other current liabilities
823 378 
Total current liabilities
37,506 33,564 
Long-term debt
74,989 76,642 
Warrant liabilities18,789  
Deferred tax liabilities
6,415 7,367 
Other non-current liabilities
 6 
Total liabilities
137,699 117,579 
Shareholders’ Equity:
Preferred stock, $0.0001 par value, 100,000,000 shares authorized; none issued and outstanding as of September 30, 2021
  
Common stock, $0.0001 par value, 500,000,000 shares authorized; 59,661,273 issued and outstanding as of September 30, 2021 and 37,200,000 issued and outstanding as of December 31, 2020
6 4 
Additional paid-in capital
140,295 53,059 
Accumulated deficit
(62,201)(14,374)
Accumulated other comprehensive income (loss)
208 506 
Shareholders’ equity
78,308 39,195 
Total liabilities and shareholders’ equity
$216,007 $156,774 


The accompanying notes are an integral part of the condensed consolidated financial statements.
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REDWIRE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)
(In thousands of U.S. dollars, except share and per share data)
 SuccessorPredecessor
 Three Months Ended September 30, 2021Three Months Ended September 30, 2020Nine Months Ended September 30, 2021Period from February 10, 2020 to September 30, 2020Period from January 1, 2020 to June 21, 2020
Revenues
$32,680 $12,485 $96,526 $17,656 $16,651 
Cost of sales
26,786 10,546 74,418 14,027 12,623 
Gross margin
5,894 1,939 22,108 3,629 4,028 
Operating expenses:
Selling, general and administrative
34,333 3,520 57,855 5,461 5,260 
Contingent earnout expense113  11,227   
Transaction expenses
1,128 500 3,547 5,959  
Research and development
1,371 776 3,326 1,303 387 
Operating income (loss)
(31,051)(2,857)(53,847)(9,094)(1,619)
Interest expense, net
1,740 82 4,931 82 76 
Other (income) expense, net
(2,957)8 (2,980)21 23 
Income (loss) before income taxes
(29,834)(2,947)(55,798)(9,197)(1,718)
Income tax expense (benefit)
(5,582)(611)(7,971)(1,889)(384)
Net income (loss)
$(24,252)$(2,336)$(47,827)$(7,308)$(1,334)
Net income (loss) per share, basic and diluted
$(0.55)$(0.06)$(1.21)$(0.20)$ 
Weighted-average shares outstanding:
Basic and diluted
44,036,040 37,200,000 39,503,720 37,200,000  
Comprehensive income (loss):
Net income (loss)
$(24,252)$(2,336)$(47,827)$(7,308)$(1,334)
Foreign currency translation gain (loss), net of tax
(119)304 (298)342 2 
Total other comprehensive income (loss), net of tax
(119)304 (298)342 2 
Total comprehensive income (loss)
$(24,371)$(2,032)$(48,125)$(6,966)$(1,332)

















The accompanying notes are an integral part of the condensed consolidated financial statements.
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REDWIRE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
(In thousands of U.S. dollars, except share and unit data)


For the Successor Q3 2021 Period
 Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated Other
Comprehensive
Income (Loss)
Total Shareholders’ Equity (Deficit)
 SharesAmount
Successor Balance as of June 30, 2021(1)
37,200,000 $4 $55,169 $(37,949)$327 $17,551 
GPAC shares net of redemptions, including PIPE, warrant liability, and Merger transaction costs22,461,273 2 52,919 — — 52,921 
Earnout settlement in Holdings’ equity— — 9,288 — — 9,288 
Equity-based compensation expense
— — 22,919 — — 22,919 
Foreign currency translation, net of tax— — — — (119)(119)
Net income (loss)
— — — (24,252)— (24,252)
Successor Balance as of September 30, 202159,661,273 $6 $140,295 $(62,201)$208 $78,308 
(1) The units of the Company prior to the Merger (as defined in Note A) have been retroactively restated to reflect the exchange ratio established in the Merger (computed as 37,200,000 shares of common stock to 100 Company units).



For the Successor Q3 2020 Period
Common StockAdditional Paid-in CapitalAccumulated
Deficit
Accumulated Other
Comprehensive
Income (Loss)
Total Shareholders’ Equity (Deficit)
SharesAmount
Successor Balance as of June 30, 2020 (1)
37,200,000 $4 $45,066 $(4,972)$38 40,136 
Holdings’ contributions— — 1,068 — — 1,068 
Foreign currency translation, net of tax
— — — — 304 304 
Net income (loss)
— — — (2,336)— (2,336)
Successor Balance as of September 30, 202037,200,000 $4 $46,134 $(7,308)$342 $39,172 
(1) The units of the Company prior to the Merger (as defined in Note A) have been retroactively restated to reflect the exchange ratio established in the Merger (computed as 37,200,000 shares of common stock to 100 Company units).









The accompanying notes are an integral part of the condensed consolidated financial statements.
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REDWIRE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(Unaudited)
(In thousands of U.S. dollars, except share and unit data)
For the Successor 2021 Period
 Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated Other
Comprehensive
Income (Loss)
Total Shareholders’ Equity (Deficit)
 SharesAmount
Successor Balance as of December 31, 2020 (1)
37,200,000 $4 $53,059 $(14,374)$506 $39,195 
GPAC shares net of redemptions, including PIPE, warrant liability, and Merger costs22,461,273 2 52,919 — — 52,921 
Holdings’ contributions— — 2,110 — — 2,110 
Earnout settlement in Holdings’ equity— — 9,288 — — 9,288 
Equity-based compensation expense
— — 22,919 — — 22,919 
Foreign currency translation, net of tax— — — — (298)(298)
Net income (loss)
— — — (47,827)— (47,827)
Successor Balance as of September 30, 202159,661,273 $6 $140,295 $(62,201)$208 $78,308 
(1) The units of the Company prior to the Merger (as defined in Note A) have been retroactively restated to reflect the exchange ratio established in the Merger (computed as 37,200,000 shares of common stock to 100 Company units).

For the Successor 2020 Period
Common StockAdditional Paid-in CapitalAccumulated
Deficit
Accumulated Other
Comprehensive
Income (Loss)
Total Shareholders’ Equity (Deficit)
SharesAmount
Successor Balance as of February 10, 2020 $ $ $ $ $ 
Holdings’ contributions (1)
37,200,000 4 46,134 — — 46,138 
Foreign currency translation, net of tax
— — — — 342 342 
Net income (loss)
— — — (7,308)— (7,308)
Successor Balance as of September 30, 202037,200,000 $4 $46,134 $(7,308)$342 $39,172 
(1) The units of the Company prior to the Merger (as defined in Note A) have been retroactively restated to reflect the exchange ratio established in the Merger (computed as 37,200,000 shares of common stock to 100 Company units).

For the Predecessor 2020 Period
 Common StockClass F Common StockAdditional
Paid-in
Capital
Accumulated
Deficit
Accumulated Other
Comprehensive
Income (Loss)
Total Shareholders’ Equity (Deficit)
 SharesPar ValueSharesPar Value
Predecessor Balance as of December 31, 20192,401,881 $ 1,316,467 $ $10 (13,198)$(8)$(13,196)
Equity-based compensation expense
— — — — 998 — — 998 
Foreign currency translation, net of tax
— — — — — — 2 2 
Net income (loss)
— — — — — (1,334)— (1,334)
Predecessor Balance as of June 21, 20202,401,881 $ 1,316,467 $ $1,008 (14,532)$(6)$(13,530)

The accompanying notes are an integral part of the condensed consolidated financial statements.
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REDWIRE CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands of U.S. dollars)
SuccessorPredecessor
Nine Months Ended September 30, 2021Period from February 10, 2020 to September 30, 2020Period from January 1, 2020 to June 21, 2020
Cash flows from operating activities:
Net income (loss)
$(47,827)$(7,308)$(1,334)
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization expense
7,508 1,646 59 
Amortization of debt issuance costs and discount
218 1 134 
Equity-based compensation expense
22,919  997 
Loss on disposal of property and equipment 227  
Contingent earnout expense not yet settled338   
Earnout settlement in Holdings’ equity9,288   
Change in fair value of warrants(2,938)  
Deferred provision (benefit) for income taxes
(8,078)(1,889) 
Other65   
Changes in assets and liabilities:
(Increase) decrease in accounts receivable
(1,244)(181)(548)
(Increase) decrease in contract assets
(3,537)(78)(433)
(Increase) decrease in inventory
(234)(126)(30)
(Increase) decrease in prepaid insurance
(3,806)  
(Increase) decrease in prepaid expenses and other assets
(126)316 (354)
Increase (decrease) in accounts payable and accrued expenses
983 (430)4,647 
Increase (decrease) in deferred revenue
(7,584)5,549 64 
Increase (decrease) in other liabilities
338 (3,398)(40)
Increase (decrease) in notes payable to seller
(608)  
Net cash provided by (used in) by operating activities
(34,325)(5,671)3,162 
Cash flows from investing activities:
Acquisition of businesses, net of cash acquired
(38,735)(63,983) 
Purchases of property, plant and equipment, net
(1,840)(353)(250)
Purchases of intangible assets(389)  
Settlement of related party receivable
4,874   
Net cash provided by (used in) investing activities
(36,090)(64,336)(250)
Cash flows from financing activities:
Repayments of loans
(47,465)(580)(102)
Payment of loan fees to third parties
(62)  
Proceeds received from loans
49,017 45,353 1,463 
Payments for the Merger transaction costs(35,935)  
Proceeds from the Merger110,583   
Payment of contingent earnout (600)  
Holdings’ contribution
 42,222  
Net cash provided by (used in) financing activities
75,538 86,995 1,361 
Effect of foreign currency rate changes on cash and cash equivalents
59 4 (6)
Net increase (decrease) in cash and cash equivalents
5,182 16,992 4,267 
Cash and cash equivalents at beginning of period
22,076  9,292 
Cash and cash equivalents at end of period
$27,258 $16,992 $13,559 
Cash paid (received) during the period for:
Interest
$4,613 $1,694 $70 
Income taxes  41 
Earnout settlement1,602   
Supplemental Schedule of Non-Cash Investing and Financing Activities:
Holdings’ contribution for acquisition of businesses
2,110 3,616  
Purchase of intangible assets settled by Holdings 300  
Initial fair value of warrants at closing21,727   
Capital expenditures not yet paid
44 41  
The accompanying notes are an integral part of the condensed consolidated financial statements.
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REDWIRE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(In thousands of U.S. dollars, except percentages, unit, share, and warrant amounts)

Note A – Description of the Business
Redwire Corporation develops and manufactures mission critical space solutions and high reliability components for the next generation space economy. With decades of flight heritage combined with the agile and innovative culture of a commercial space platform, Redwire Corporation is uniquely positioned to assist our customers in solving the complex challenges of future space missions.

AE Industrial Partners Fund II, LP (“AEI”), a private equity firm specializing in aerospace, defense, and government services, formed a series of acquisition vehicles on February 10, 2020, which included Cosmos Parent, LLC, Cosmos Intermediate, LLC, Cosmos Finance, LLC and Cosmos Acquisition, LLC, with Cosmos Parent, LLC being the top holding company. Cosmos Parent, LLC owned 100% of the equity in Cosmos Intermediate, LLC; Cosmos Intermediate, LLC owned 100% of the equity in Cosmos Finance, LLC; Cosmos Finance, LLC owned 100% of the equity in Cosmos Acquisition, LLC. Upon the formation of these acquisition vehicles, Cosmos Intermediate, LLC (“Successor”) effected a number of acquisitions through its wholly owned subsidiary, Cosmos Acquisition, LLC. Following the acquisitions, the Successor became a wholly owned subsidiary of AE Red Holdings, LLC formerly known as Redwire, LLC (“Holdings”).

Strategic acquisitions that augment our technology and product offerings are a key part of our growth strategy. The Company has completed eight 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. These acquisitions included: Adcole Space, LLC (“Adcole”), Deep Space Systems, Inc. (“DSS”), In Space Group, Inc. and its subsidiaries (collectively, “MIS” or “Predecessor”), Roccor, LLC (“Roccor”), and LoadPath, LLC (“LoadPath”) as of December 31, 2020.

During the nine months ended September 30, 2021, the following acquisitions were completed:
January 2021 – Acquired Oakman Aerospace, Inc. (“Oakman”), which specializes in the development of modular open system architecture, rapid spacecraft design and development, and custom missions, payloads, and data distribution services.
February 2021 – Acquired Deployable Space Systems, Inc. (“DPSS”), whose mission is to develop new and enabling deployable technologies for space applications, transition emerging technologies to industry for infusion into future Department of Defense (“DoD”), National Aeronautics and Space Administration (“NASA”), and/or commercial programs and design, analyze, build, test and deliver on-time the deployable solar arrays, deployable structures and space system products. DPSS’s product portfolio includes the award-winning and patented ROSA (Roll-Out Solar Array), Integrated Modular Blanket Assembly; Rigid-Panel and Functional Advanced Concentrator Technology solar array technologies; a multitude of elastically and articulated deployable structures and booms, open-lattice booms, telescopic booms; and a variety of mission-enabling mechanisms for space applications.

On September 2, 2021, the previously announced merger (the “Merger”) with Genesis Park Acquisition Corp. (“GPAC”) was consummated pursuant to the Agreement and Plan of Merger dated March 25, 2021 by and among GPAC, Shepard Merger Sub Corporation, a Delaware corporation and direct, wholly owned subsidiary of GPAC, Cosmos Intermediate, LLC and Holdings. Upon the closing of the Merger, GPAC was renamed to Redwire Corporation (“Redwire” or the “Company”), the SEC registrant. As a result of the Merger, the Company received aggregate gross proceeds of $110,583 thousand from the trust account of GPAC and PIPE proceeds. Proceeds from the Merger were partially used to repay the $41,555 thousand outstanding under the Silicon Valley Bank (“SVB”) Loan, including interest of $102 thousand, and Merger transaction costs and other costs paid through the funds flow of $38,747 thousand, consisting of marketing, legal and other professional fees.

The Merger was accounted for as a reverse recapitalization in which GPAC was treated as the acquired company. 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 Cosmos Intermediate, LLC in many respects. Immediately prior to the closing of the Merger, but following the consummation of the Company’s domestication to a Delaware corporation, the authorized capital stock of the Company consisted of 600,000,000 shares of capital stock, including (i) 500,000,000 shares of Redwire common stock with a par value $0.0001 per share and (ii) 100,000,000 shares of Redwire preferred stock. At the effective time of the Merger, the 100 company units of Cosmos Intermediate, LLC were cancelled and automatically deemed for all purposes to represent Holdings’ right to receive, in the aggregate, $75,000 thousand of cash, 37,200,000 shares of common stock and 2,000,000 warrants to purchase one share of common stock per warrant (with such amount of warrants corresponding to the forfeiture of certain private placement warrants acquired by Genesis Park Holdings (the “Sponsor”) and
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REDWIRE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(In thousands of U.S. dollars, except percentages, unit, share, and warrant amounts)
Jefferies LLC (“Jefferies”) in connection with GPAC’s initial public offering). The exchanged 37,200,000 shares of common stock consideration to Holdings, the GPAC common stock shares outstanding at the time of closing of 13,961,273, and the PIPE financing shares issued at closing of 8,500,000 made up the total of the 59,661,273 shares of common stock outstanding as of September 2, 2021. The 100 units of the Company prior to the Merger were retroactively restated to reflect the exchange ratio established in the Merger (computed as 37,200,000 shares of common stock to 100 Company units).

The Company includes the Predecessor, which is comprised of MIS before its acquisition date, and the Successor, including Adcole, DSS, MIS, Roccor, LoadPath, Oakman, and DPSS, after the acquisition of each, respectively.

COVID-19 Operational Posture and Impact
Since early 2020, the COVID-19 pandemic has created a climate of uncertainty which has significantly impacted global economies and the Company’s operating environment. Such impacts include, among others, supply chain disruptions, labor shortages, regulatory challenges, inflationary pressures, as well as market volatility. In addition, decreases in the availability, cost and delivery of supplies have caused shortages and delays for the procurement of raw materials, components and other supplies required to fulfill the Company’s performance obligations. The long-term impacts of COVID-19 on government budgets and other funding priorities are difficult to predict and could adversely affect the Company’s operations and financial results. There can be no assurances that actions or responsive measures taken on the part of the Company or governmental authorities will be successful in mitigating increased risks associated with COVID-19.

Note B – Summary of Significant Accounting Policies
Basis of Presentation
The accompanying condensed consolidated financial statements are presented for the following periods:
the three months ended September 30, 2021 (the “Successor Q3 2021 Period”), which includes the results of Adcole, DSS, MIS, Roccor, LoadPath, Oakman and DPSS from the beginning of the period.
as of September 30, 2021 and the nine months ended September 30, 2021 (the “Successor 2021 Period”), which includes the results of Adcole, DSS, MIS, Roccor and LoadPath from the beginning of the period as well as 2021 acquisitions Oakman and DPSS from their respective acquisition dates.
the three months ended September 30, 2020 (“the Successor Q3 2020 Period”), which includes the results of Adcole, DSS and MIS from the beginning of the period.
as of September 30, 2020 and the period from February 10, 2020 (inception) to September 30, 2020 (the “Successor 2020 Period”), which includes the results of Adcole, DSS and MIS from their respective acquisition dates.
the period from January 1, 2020 to June 21, 2020 (the “Predecessor 2020 Period”), which only includes the results of MIS.

MIS was identified as the Predecessor through an analysis of various factors, including the size, financial characteristics, ongoing management, and order in which the acquired entities were acquired.

The accompanying condensed consolidated financial statements have been prepared in accordance with United States Generally Accepted Accounting Principles (“U.S. GAAP”) for interim financial statement information. Accordingly, they do not include all of the information and notes required by U.S. GAAP for complete financial statements. The year-end condensed consolidated balance sheet data was derived from audited financial statements but does not include all disclosures required by accounting principles generally accepted in the United States of America. In the opinion of management, the condensed consolidated financial statements include all adjustments, consisting of adjustments associated with acquisition accounting and normal recurring adjustments, necessary for the fair statement of such financial statements. All intercompany balances and transactions have been eliminated in consolidation.

The Company’s unaudited condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and related notes for the period ended December 31, 2020. Interim results are not necessarily indicative of the results for a full year.

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REDWIRE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(In thousands of U.S. dollars, except percentages, unit, share, and warrant amounts)
Warrants
As part of the Merger, public warrants were established as equity and private warrants were established as a liability. 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 Accounting Standards Codification (“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. Management considered whether the private warrants display the three characteristics of a derivative under ASC 815, and concluded that the private warrants meet the definition of a derivative. However, the private warrants fail to meet the equity scope exception in ASC 815-10-15-74(a) and thus are classified as a liability measured at fair value, subject to remeasurement at each reporting period. The Company measured the private warrant liability at fair value at the closing of the Merger and then at each reporting period with changes in fair value recognized as other (income) expense, net in the condensed consolidated statements of operations and comprehensive income (loss).

Equity-based Compensation
The Company’s equity-based compensation plans are classified as equity plans and compensation expense is generally recognized over the vesting period of stock awards. The Company issues stock awards in the form of incentive units, non-qualified stock options and restricted stock units. The fair value of incentive units and stock options are calculated on the grant date using the Black-Scholes Option Pricing Model (“OPM”). The fair value of the restricted stock units are calculated based on the closing market price of the Company’s common stock on the grant date.

The vesting of the incentive units is contingent on service-based, performance-based, and market conditions and, as such, the recognition of compensation expense is deferred until it is probable the performance conditions will be satisfied. Once it is probable that the performance conditions will be satisfied, unrecognized compensation expense is recognized based on the portion of the requisite service period that has been rendered. If the requisite period is complete, compensation expense is recognized regardless of market conditions being met and recognizes forfeitures as they occur.

For non-qualified stock options and restricted stock units, the Company recognizes the grant date fair value as compensation expense on a straight-line method over the vesting period (typically 3 years) and recognizes forfeitures as they occur.

Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenues and expenses during the reporting periods.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, actual results could differ from those estimates. Accounting policies subject to estimates include valuation of intangible assets and contingent consideration, revenue recognition, income taxes, and equity-based compensation.

Emerging Growth Company
Section 102(b)(1) of the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”) exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that an emerging growth company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such an election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period, which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard.

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REDWIRE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(In thousands of U.S. dollars, except percentages, unit, share, and warrant amounts)
This may make comparison of the Company’s financial statements with another public company that is neither an emerging growth company nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Recently Issued Accounting Pronouncements
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02, Leases (Topic 842), which supersedes the current lease requirements in ASC 840, Leases. ASU 2016-02 requires lessees to recognize a right-of-use asset and related lease liability for all leases, with a limited exception for short-term leases. Leases will be classified as either finance or operating, with the classification affecting the pattern of expense recognition in the condensed consolidated statements of operations and comprehensive income (loss). Currently, leases are classified as either capital or operating, with any capital leases recognized on the condensed consolidated balance sheets. The reporting of lease-related expenses in the condensed consolidated statements of operations and comprehensive income (loss) and condensed consolidated statements of cash flows will be generally consistent with the current guidance.

Effective January 1, 2022, the Company adopted the new lease standard using a modified retrospective transition method with a cumulative effect adjustment in the period of adoption. In accordance with ASC 842, the Company elected the following package of practical expedients: (i) to use hindsight analysis on expired or existing leases as of the effective date; (ii) to not apply this standard to short-term leases (i.e. with a term less than 12 months); and (iii) to not reassess the lease classification for existing or expired contracts. The Company currently estimates that the adoption of this standard will result in the recognition of right of use assets and lease liabilities ranging from approximately $8.0 million to $11.0 million. Adoption of this standard is not expected to have a material impact on the Company’s results of operations or cash flows.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments–Credit Losses (Topic 326), an amendment of the FASB ASC. Subsequent to the issuance of ASU 2016-13, there were various updates that amended and clarified the impact of ASU 2016-13. ASU 2016-13 broadens the information that an entity must consider in developing its expected credit loss estimate for assets measured either collectively or individually. The amendments in ASU 2016-13 will require an entity to record an allowance for credit losses for certain financial instruments and financial assets, including accounts receivable, based on expected losses rather than incurred losses. The measurement of expected credit losses is based on relevant information about past events, including historical experience, current conditions, and reasonable and supportable forecasts that affect the collectability of the reported amount. An entity must use judgment in determining the relevant information and estimation methods that are appropriate in its circumstances. The use of forecasted information incorporates more timely information in the estimate of expected credit losses. The new guidance will be effective for the year beginning January 1, 2023. The Company does not expect this guidance to have a material impact on its condensed consolidated financial statements or related disclosures.

Note C – Business Combinations
Adcole Acquisition
On March 2, 2020, the Successor acquired 100% of the equity interest of Adcole in exchange for cash. The acquisition supports the Company’s growth in its offering of space structures.
The following table summarizes the fair value of the consideration transferred and the estimated fair values of the major classes of assets acquired and liabilities assumed as of the acquisition date.
March 2, 2020
Cash paid
$32,640 
Purchase consideration
$32,640 
Assets:
Cash
$156 
Accounts receivable
840 
Contract assets
1,427 
Inventory
212 
Prepaid expenses and other current assets
661 
Property, plant and equipment
444 
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REDWIRE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(In thousands of U.S. dollars, except percentages, unit, share, and warrant amounts)
March 2, 2020
Intangible assets
9,690 
Total assets13,430 
Liabilities:
Accounts payable
894 
Accrued expenses
644 
Deferred revenue
777 
Total liabilities2,315 
Fair value of net identifiable assets acquired
11,115 
Goodwill
$21,525 
The following table summarizes the intangible assets acquired by class:
March 2, 2020Weighted average useful life in years
Trademark
$1,000 10
Technology
2,400 10
Customer relationships
6,100 20
In-process research and development
190 
Total intangible assets
$9,690 
The fair value of the acquired trademark and technology was estimated using the relief from royalty (“RFR”) method. The fair value of the acquired customer relationships was estimated using the excess earnings method. The fair value of the in-process research and development (“IPR&D”) was estimated using the replacement cost method.

The acquisition was accounted for as a business combination, whereby the excess of the consideration paid over the fair value of identifiable net assets was allocated to goodwill. 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. For tax purposes, the goodwill is deductible over 15 years.

The results of operations of Adcole for the period from March 2, 2020 to September 30, 2020 have been included in the results of operations for the Successor 2020 Period; the post-acquisition revenues and net loss included in the Successor 2020 Period were $5,733 thousand and $1,145 thousand, respectively. The acquisition-related costs included in transaction expenses in the condensed consolidated statements of operations and comprehensive income (loss) for the Successor 2020 Period were $2,055 thousand.

DSS Acquisition
On June 1, 2020, the Successor acquired 100% of the equity interest of DSS in exchange for cash and 1,000,000 units of the Successor’s Holdings’ equity (“Parent Units”). The acquisition supported the Company’s growth in its offering of engineering solutions.

The following table summarizes the fair value of the consideration transferred and the estimated fair values of the major classes of assets acquired and liabilities assumed as of the acquisition date.
June 1, 2020
Cash paid
$3,940 
Equity issued
1,000 
Purchase consideration
$4,940 
Assets:
Cash
$1,071 
Accounts receivable
1,282 
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REDWIRE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(In thousands of U.S. dollars, except percentages, unit, share, and warrant amounts)
Contract assets
107 
Inventory
39 
Prepaid expenses and other current assets
37 
Property, plant and equipment
710 
Intangible assets
850 
Other non-current assets
26 
Total assets4,122 
Liabilities:
Accounts payable
284 
Deferred revenue
103 
Current portion of long-term debt
353 
Other current liabilities
1,178 
Long-term debt
705 
Deferred tax liabilities
458 
Total liabilities3,081 
Fair value of net identifiable assets acquired
1,041 
Goodwill
$3,899 
The following table summarizes the intangible assets acquired by class:
June 1, 2020Weighted average useful life in years
Trademark
$150 5
Customer relationships
700 20
Total intangible assets
$850 
The fair value of the acquired trademark was determined using the RFR method. The fair value of the acquired customer relationships was determined using the excess earnings method.

The acquisition was accounted for as a business combination, whereby the excess of the purchase consideration over the fair value of identifiable net assets was allocated to goodwill. 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. For tax purposes, the goodwill is not deductible.

The results of operations of DSS for the period from June 1, 2020 to September 30, 2020 have been included in the results of operations for the Successor 2020 Period; the post-acquisition revenues and net loss included in the Successor 2020 Period were $3,134 thousand and $563 thousand, respectively. The acquisition-related costs included in transaction expenses in the condensed consolidated statements of operations and comprehensive income (loss) for the Successor 2020 Period were $434 thousand.

During the Successor 2021 Period, there was a measurement period adjustment to goodwill of $85 thousand, decreasing the balance to $3,899 thousand. Refer to Note H for further discussion.

MIS Acquisition
On June 22, 2020, the Successor acquired 100% of the equity interest of MIS in exchange for cash and 2,615,726 Parent Units. The acquisition supports the Company’s growth in its offering of space structures.

The purchase agreement with the sellers of MIS awarded such sellers with a contingent right to an earnout payment from the Company upon the achievement of certain revenue milestones over the year ended December 31, 2020. The earnout amount would be computed as $1.50 for every $1.00 of MIS Revenue (as defined in the purchase agreement), in excess of $40,000
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REDWIRE CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)
(In thousands of U.S. dollars, except percentages, unit, share, and warrant amounts)
thousand for the year ended December 31, 2020, and the contingent earnout would not exceed $15,000 thousand or be less than $0.

The fair value of the earnout is arrived at using the Black-Scholes option pricing model (“OPM”) using the following assumptions:
MIS Black-Scholes OPM Assumptions
Risk-free interest rate
0.05 %
Revenue volatility
51.7 %

Including the equity component, the total fair value of the contingent earnout payment of $11,491 thousand was settled as of September 30, 2021 for $2,203 thousand in cash and $9,288 thousand in equity of Holdings and is reflected in contingent earnout expense on the condensed consolidated statements of operations and comprehensive income (loss) for the Successor 2021 Period as the adjustment in fair value occurred subsequent to the MIS measurement period.

The following table summarizes the fair value of the consideration transferred and the estimated fair values of the major classes of assets acquired and liabilities assumed as of the acquisition date.
June 22, 2020
Cash paid
$42,177 
Equity issued
2,616 
Contingent consideration
600 
Purchase consideration
$45,393 
Assets:
Cash
$13,559 
Accounts receivable
1,097 
Contract assets
665 
Property, plant and equipment
451 
Intangible assets
35,000 
Other non-current assets
676 
Total assets51,448 
Liabilities:
Accounts payable