References in this report (the "Quarterly Report") to "we," "us" or the "Company" refer toVector Acquisition Corporation . References to our "management" or our "management team" refer to our officers and directors, and references to the "Sponsor" refer toVector Acquisition Partners, L.P. The following discussion and analysis of the Company's financial condition and results of operations should be read in conjunction with the financial statements and the notes thereto contained elsewhere in this Quarterly Report. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. Special Note Regarding Forward-Looking Statements This Quarterly Report includes "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities and Exchange Act of 1934, as amended (the "Exchange Act"), that are not historical facts, and involve risks and uncertainties that could cause actual results to differ materially from those expected and projected. All statements, other than statements of historical fact included in this Quarterly Report including, without limitation, statements in this "Management's Discussion and Analysis of Financial Condition and Results of Operations" regarding the Company's financial position, business strategy, the plans and objectives of management for future operations and our ability to complete our business combination withRocket Lab USA, Inc. ("Rocket Lab "), are forward-looking statements. Words such as "anticipate," "believe," "continue," "could," "estimate," "expect," "intends," "may," "might," "plan," "possible," "potential," "predict," "project," "should," "would" and variations thereof and similar words and expressions are intended to identify such forward-looking statements. Such forward-looking statements relate to future events or future performance, but reflect management's current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to Part I, Item 1A. Risk Factors in the Company's Annual Report on Form 10-K for the year endedDecember 31, 2021 , filed with theSecurities and Exchange Commission (the "SEC") onMarch 31, 2021 , as amended by Amendment No. 1 thereto, filed with theSEC onMay 3, 2021 (as so amended, the "Form 10-K"), as well as the "Risk Factors" section included in the Company's Quarterly Report on Form 10-Q for the quarter endedMarch 31 , 20201, filed with theSEC onMay 24, 2021 , and the the Company's Registration Statement on Form S-4 relating to the Company's business combination withRocket Lab , initially filed with theSEC onJune 25, 2021 . The Company's securities filings can be accessed on the EDGAR section of theSEC's website at www.sec.gov. Except as expressly required by applicable securities law, the Company disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. Overview We are a blank check company incorporated onJuly 28, 2020 as aCayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization or similar business combination with one or more businesses or entities. We intend to effectuate our initial business combination using cash from the proceeds of our initial public offering and the sale of the private placement warrants, our shares, debt or a combination of cash, equity and debt. We expect to continue to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to complete a business combination will be successful. Rocket Lab Business Combination OnMarch 1, 2021 , we entered into an Agreement and Plan of Merger (as amended by Amendment No. 1 thereto dated as ofMay 7, 2021 , and as the same may be further amended or supplemented, the "Merger Agreement") withRocket Lab , andPrestige USA Merger Sub, Inc. , aDelaware corporation and a wholly owned subsidiary ofRocket Lab ("Merger Sub"). The Merger Agreement and the transactions contemplated thereby (the "Business Combination") were unanimously approved by the boards of directors of each of the Company andRocket Lab . In contemplation of the Business Combination, we will domesticate as aDelaware corporation (the "Domestication" and the company following the Domestication, "Vector Delaware") and, in connection therewith, (a) the Class A ordinary shares and the Class B ordinary shares issued and outstanding immediately prior to the Domestication will convert into an equal number of shares of Class A common stock, par value$0.0001 per share, and Class B common stock, par value$0.0001 per share, of Vector Delaware, respectively (such shares of Class A common stock and Class B common stock, together the "Vector Delaware Common Stock"); (b) our warrants to purchase Class A ordinary shares issued and outstanding immediately prior to the Domestication will convert into an equal number of warrants to purchase Vector Delaware Class A common stock (the "Vector Delaware Warrants") and (c) our units that have not been separated into Class A ordinary shares and warrants issued and outstanding immediately prior to the Domestication will convert into an equal number of units of Vector Delaware (the "Vector Delaware Units"). 20
--------------------------------------------------------------------------------
Table of Contents The Merger Agreement further contemplates that the Business Combination will be effected through the following transactions:
• in connection with the Domestication, (i) Vector's Class A ordinary shares, par value$0.0001 per share (the "Class A ordinary shares"), issued and outstanding immediately prior to the Domestication will convert into an equal number of shares of Class A common stock, par value$0.0001 per share, of Vector Delaware (the "Vector Delaware Class A common stock"), and Vector's Class B ordinary shares, par value$0.0001 per share (the "Class B ordinary shares") issued and outstanding immediately prior to the Domestication will convert into an equal number of shares of Class B common stock, par value$0.0001 per share, of Vector Delaware (together with the Vector Delaware Class A common stock, the "Vector Delaware common stock"); (ii) Vector's warrants to purchase Class A ordinary shares issued and outstanding immediately prior to the Domestication will convert into an equal number of warrants to purchase Vector Delaware Class A common stock (the "VectorDelaware warrants") and (iii) Vector's units that have not been separated into Class A ordinary shares and warrants issued and outstanding immediately prior to the Domestication will convert into an equal number of units of Vector Delaware (the "Vector Delaware units"); • concurrently with the Domestication,Rocket Lab will amend and restate its certificate of incorporation (the "Charter Amendment"), and in connection therewith, among other things, (i) each issued and outstanding share of preferred stock, par value$0.0001 per share, ofRocket Lab will convert into shares of common stock, par value$0.0001 per share, ofRocket Lab (the "Rocket Lab Common Stock"), in accordance with the terms thereof; (ii) each issued and outstanding share of Rocket Lab Common Stock (after giving effect to the conversion contemplated by clause (i)) will convert automatically into a number of shares of Rocket Lab Common Stock equal to the Exchange Ratio (as defined below) and (iii) each then issued and outstandingRocket Lab warrant will convert into a new warrant ofRocket Lab (a "Rocket Lab New Warrant") for a number of shares of Rocket Lab Common Stock and with the applicable exercise price per share determined in accordance with the Merger Agreement; •Rocket Lab will enter into redemption agreements with certain members of its management pursuant to whichRocket Lab will redeem from such individuals shares of Rocket Lab Common Stock (the "Management Redemption Shares") for an aggregate purchase price not to exceed$40,000,000 ; • immediately following the Domestication, Merger Sub will merge with and into VectorDelaware , with Vector Delaware surviving the merger as a wholly owned subsidiary ofRocket Lab (the "First Merger"), and in connection therewith, (a) the shares of Vector Delaware Common Stock (other than any treasury shares, shares held by Vector Delaware or any dissenting shares) issued and outstanding immediately prior to the effective time of the First Merger (the "First Effective Time") will convert into an equal number of shares of Rocket Lab Common Stock; (b) the Vector Delaware Warrants that are outstanding and unexercised immediately prior to the First Effective Time will convert into an equal number of warrants to purchase Rocket Lab Common Stock (the "Assumed Warrants") and (c) the Vector Delaware Units that are outstanding immediately prior to the First Effective Time will convert into an equal number of units ofRocket Lab (the "Assumed Units"); and • immediately following the First Effective Time,Rocket Lab will merge with and into Vector Delaware, with Vector Delaware surviving the merger (VectorDelaware as the surviving corporation, "New Rocket Lab " and such merger, the "Second Merger"), and in connection therewith, among other things, (i) the shares of Rocket Lab Common Stock (other than any treasury shares, shares held byRocket Lab or dissenting shares) issued and outstanding immediately prior to the effective time of the Second Merger (the "Second Effective Time") will convert into an equal number of shares of common stock, par value$0.0001 per share, ofNew Rocket Lab (the "New Rocket Lab Common Stock"); (ii) the Rocket Lab New Warrants and the Assumed Warrants outstanding and unexercised immediately prior to the Second Effective Time will convert into an equal number of warrants to purchase New Rocket Lab Common Stock; and (iii) each Assumed Unit that is outstanding immediately prior to the Second Effective Time will automatically be converted into aNew Rocket Lab unit that, upon the closing of the Business Combination (the "Closing"), will be cancelled and will entitle the holder thereof to one share ofNew Rocket Lab Common Stock and one-third of one warrant, with each whole warrant representing the right to purchase one share of New Rocket Lab Common Stock. 21
--------------------------------------------------------------------------------
Table of Contents In addition to the above consideration, if the closing price ofNew Rocket Lab Common Stock is equal to or greater than$20.00 for a period of at least 20 days out of 30 consecutive trading days during the period commencing on the 90th day following the Closing and ending on the 180th day following the Closing, theRocket Lab stockholders will be entitled to receive additional shares of New Rocket Lab Common Stock equal to 8% of the Aggregate Share Consideration (as defined below) (computed without the deduction for the Management Redemption Shares). For purposes of the Merger Agreement, the "Exchange Ratio" equals the quotient obtained by dividing (i) the Aggregate Share Consideration by (ii) the aggregate number of shares of Rocket Lab Common Stock outstanding immediately prior to the Charter Amendment on a fully diluted basis (other than the Management Redemption Shares). The "Aggregate Share Consideration" means the quotient obtained by dividing (i) an amount equal to$4,000,000,000 minus the Management Redemption Amount by (ii) (x) an amount equal to$10.00 plus (y) an amount equal to (a) the interest earned on funds held in the Company's trust account divided by (b) the number of Class A ordinary shares outstanding immediately prior to the Closing. The Business Combination is expected to close in the third quarter of 2021, subject to the satisfaction of certain customary closing conditions. Concurrently with the execution of the Merger Agreement, we entered into subscription agreements (the "Subscription Agreements") with certain investors (the "PIPE Investors "), pursuant to which thePIPE Investors agreed to subscribe for and purchase, and we agreed to issue and sell to suchPIPE Investors , immediately prior to Closing, an aggregate of 46,700,000 shares of New Rocket Lab Common Stock for a purchase price of$10.00 per share, for aggregate gross proceeds of$467,000,000 (the "PIPE Financing"). The closing of the PIPE Financing is contingent upon, among other things, the substantially concurrent consummation of the Business Combination. Results of Operations We have neither engaged in any operations nor generated any revenues to date. Our only activities from inception toJune 30, 2021 were organizational activities, those necessary to prepare for the initial public offering, described below, and, after the initial public offering, identifying a target company for a business combination, and proceeding with the closing of the business combination disclosed in Note 6. We do not expect to generate any operating revenues until after the completion of our business combination. We generate non-operating income in the form of interest income on marketable securities held in the trust account. We incur expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses in connection with completing a business combination. For the three months endedJune 30, 2021 , we had a net loss of$1,059,094 , which consisted of formation and operating expenses of$1,145,290 offset by interest income on marketable securities held in the trust account of$4,863 and the change in fair value of warrant liabilities of$81,333 . For the six months endedJune 30, 2021 , we had a net loss of$24,619,357 , which consisted of formation and operating expenses of$3,075,696 and the change in fair value of the warrant liabilities offset by interest income on marketable securities held in the trust account of$9,673 . Liquidity and Capital Resources OnSeptember 29, 2020 , we consummated our initial public offering of 30,000,000 units, at a price of$10.00 per unit, generating gross proceeds of$300,000,000 . Simultaneously with the closing of our initial public offering, we consummated the sale of 5,333,333 private placement warrants to our Sponsor at a price of$1.50 per private placement warrant generating gross proceeds of$8,000,000 . OnOctober 20, 2020 , in connection with the underwriters' election to partially exercise of their over-allotment option, we consummated the sale of an additional 2,000,000 units and the sale of an additional 266,667 private placement warrants, generating total gross proceeds of$20,400,000 . Following our initial public offering, the partial exercise of the over-allotment option and the sale of the private placement warrants, a total of$320,000,000 was placed in the trust account. We incurred$18,252,382 in transaction costs, including$6,400,000 of underwriting fees,$11,200,000 of deferred underwriting fees and$652,382 of other offering costs. For the six months endedJune 30, 2021 , net cash used in operating activities was$821,057 , which consisted of our net loss of$24,619,357 offset by a noncash charge derived from the change in warrant liability of$21,553,334 , interest earned on investment held in the trust account of$9,673 and changes in operating assets and liabilities, which provided$2,254,639 of cash from operating activities. 22
--------------------------------------------------------------------------------
Table of Contents As ofJune 30, 2021 , we had investments held in the trust account of$320,014,519 . We intend to use substantially all of the funds held in the trust account, including any amounts representing interest earned on the trust account, which interest shall be net of taxes payable and excluding deferred underwriting commissions, to complete our business combination. We may withdraw interest from the trust account to pay taxes, if any. To the extent that our share capital or debt is used, in whole or in part, as consideration to complete a business combination, the remaining proceeds held in the trust account will be used as working capital to finance the operations of the target business or businesses, make other acquisitions and pursue our growth strategies. AtJune 30, 2021 , we had cash of$44,846 held outside of the trust account. We intend to use the funds held outside the trust account primarily to identify and evaluate target businesses, perform business due diligence on prospective target businesses, travel to and from the offices, plants or similar locations of prospective target businesses or their representatives or owners, review corporate documents and material agreements of prospective target businesses, structure, negotiate and complete a business combination. In order to fund working capital deficiencies or finance transaction costs in connection with a business combination, our Sponsor or an affiliate of our Sponsor or certain of our officers and directors may, but are not obligated to, loan us funds as may be required. If we complete a business combination, we may repay such loaned amounts out of the proceeds of the trust account released to us. In the event that a business combination does not close, we may use a portion of the working capital held outside the trust account to repay such loaned amounts, but no proceeds from our trust account would be used for such repayment. Up to$1,500,000 of such loans may be convertible into warrants, at a price of$1.00 per warrant, at the option of the lender. The warrants would be identical to the private placement warrants. OnJuly 19, 2021 the Company issued an unsecured working capital loan promissory note, pursuant to which the Company may borrow up to$300,000 from the Sponsor, for expenses related to the business combination. All unpaid borrowings will be due on the day on which the Company consummates a Business Combination. We do not believe we will need to raise additional funds in order to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertaking in-depth due diligence and negotiating a business combination are less than the actual amount necessary to do so, we may have insufficient funds available to operate our business prior to our initial business combination. Moreover, we may need to obtain additional financing either to complete our business combination or because we become obligated to redeem a significant number of our public shares upon completion of our business combination, in which case we may issue additional securities or incur debt in connection with such business combination. Off-Balance Sheet Financing Arrangements We have no obligations, assets or liabilities, which would be considered off-balance sheet arrangements as ofJune 30, 2021 . We do not participate in transactions that create relationships with unconsolidated entities or financial partnerships, often referred to as variable interest entities, which would have been established for the purpose of facilitating off-balance sheet arrangements. We have not entered into any off-balance sheet financing arrangements, established any special purpose entities, guaranteed any debt or commitments of other entities, or purchased any non-financial assets. Contractual Obligations We do not have any long-term debt, capital lease obligations, operating lease obligations or long-term liabilities, other than an agreement to pay our Sponsor a monthly fee of$10,000 for office space, administrative and support services, provided to the Company. We began incurring these fees onSeptember 24, 2020 and will continue to incur these fees monthly until the earlier of the completion of a business combination or the Company's liquidation. The underwriters are entitled to a deferred fee of$0.35 per unit, or$11,200,000 in the aggregate (see Note 6). The deferred fee will become payable to the underwriters from the amounts held in the trust account solely in the event that we complete a business combination, subject to the terms of the underwriting agreement. 23
--------------------------------------------------------------------------------
Table of Contents Critical Accounting Policies The preparation of condensed financial statements and related disclosures in conformity with accounting principles generally accepted inthe United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the condensed financial statements, and income and expenses during the periods reported. Actual results could materially differ from those estimates. We have not identified any critical accounting policies. Warrant Liabilities We account for the warrants issued in connection with our initial public offering in accordance with the guidance contained in ASC 815-40 under which the warrants do not meet the criteria for equity treatment and must be recorded as liabilities. Accordingly, we classify the warrants as liabilities at their fair value and adjust the warrants to fair value at each reporting period. This liability is subject to re-measurement at each balance sheet date until exercised, and any change in fair value is recognized in our statement of operations. The initial fair value of the warrants were estimated using a Monte Carlo simulation approach. The subsequent measurement of the Public Warrants are classified as Level 1 due to the use of an observable market quote in an active market and the subsequent measurement of the Private Placement Warrants are classified Level 2 due to the use of observable inputs other than Level 1. Class A Ordinary Shares Subject to Possible Redemption We account for our Class A ordinary shares subject to possible redemption in accordance with the guidance in Accounting Standards Codification ("ASC") Topic 480 "Distinguishing Liabilities from Equity." Class A ordinary shares subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable ordinary shares (including ordinary shares that features redemption rights that is either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within our control) is classified as temporary equity. At all other times, ordinary shares are classified as shareholders' equity. Our ordinary shares feature certain redemption rights that are considered to be outside of our control and subject to occurrence of uncertain future events. Accordingly, 32,000,000 Class A ordinary shares subject to possible redemption are presented as temporary equity, outside of the shareholders' equity section of our condensed balance sheets. Net Income (Loss) Per Ordinary Share We apply the two-class method in calculating earnings per share. Net income per ordinary share, basic and diluted for Class A redeemable ordinary shares is calculated by dividing the interest income earned on the trust account by the weighted average number of Class A redeemable ordinary shares outstanding since original issuance. Net loss per ordinary share, basic and diluted for Class B non-redeemable ordinary shares is calculated by dividing the net income (loss), less income attributable to Class A redeemable ordinary shares, by the weighted average number of Class B non-redeemable ordinary shares outstanding for the periods presented. The calculation of diluted loss per ordinary share does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering, and (ii) Private Placement Warrants since inclusion of such warrants would be anti-dilutive. Recent Accounting Standards Management does not believe that any other recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on our condensed financial statements. InAugust 2020 , theFinancial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2020-06, Debt - Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging - Contracts in Entity's Own Equity (Subtopic 815-40) ("ASU 2020-06") to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance pertaining to equity classification of contracts in an entity's own equity. The new standard also introduces additional disclosures for convertible debt and freestanding instruments that are indexed to and settled in an entity's own equity. ASU 2020-06 amends the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU 2020-06 is effectiveJanuary 1, 2022 and should be applied on a full or modified retrospective basis, with early adoption permitted beginning onJanuary 1, 2021 . We are currently assessing the impact, if any, that ASU 2020-06 would have on its financial position, results of operations or cash flows. 24
--------------------------------------------------------------------------------
Table of Contents
© Edgar Online, source