References in this report (the "Quarterly Report") to "we," "us" or the
"Company" refer to Vector Acquisition Corporation. References to our
"management" or our "management team" refer to our officers and directors, and
references to the "Sponsor" refer to Vector 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 with Rocket 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 ended December 31, 2021, filed with the Securities and Exchange
Commission (the "SEC") on March 31, 2021, as amended by Amendment No. 1 thereto,
filed with the SEC on May 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 ended March 31, 20201, filed with the SEC on May 24, 2021, and
the the Company's Registration Statement on Form
S-4
relating to the Company's business combination with Rocket Lab, initially filed
with the SEC on June 25, 2021. The Company's securities filings can be accessed
on the EDGAR section of the SEC'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 on July 28, 2020 as a Cayman 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
On March 1, 2021, we entered into an Agreement and Plan of Merger (as amended by
Amendment No. 1 thereto dated as of May 7, 2021, and as the same may be further
amended or supplemented, the "Merger Agreement") with Rocket Lab, and Prestige
USA Merger Sub, Inc., a Delaware corporation and a wholly owned subsidiary of
Rocket 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 and Rocket Lab.
In contemplation of the Business Combination, we will domesticate as a Delaware
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").

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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 "Vector
      Delaware 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, of Rocket Lab will convert into
      shares of common stock, par value $0.0001 per share, of Rocket 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 outstanding Rocket Lab warrant
      will convert into a new warrant of Rocket 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 which Rocket 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
      Vector Delaware, with Vector Delaware surviving the merger as a wholly owned
      subsidiary of Rocket 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
      of Rocket 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 (Vector
      Delaware 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 by Rocket 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, of New 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 a New 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 of New 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.




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In addition to the above consideration, if the closing price of New 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, the
Rocket 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 the PIPE Investors agreed to subscribe
for and purchase, and we agreed to issue and sell to such PIPE 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 to June 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 ended June 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 ended June 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
On September 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.
On October 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 ended June 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.

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As of June 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.
At June 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.
On July 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 of June 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 on September 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.


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  Table of Contents
Critical Accounting Policies
The preparation of condensed financial statements and related disclosures in
conformity with accounting principles generally accepted in the 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.
In August 2020, the Financial 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 effective January 1, 2022 and should be applied on a full or modified
retrospective basis, with early adoption permitted beginning on January 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.


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