Additional information regarding the Business Combination and related transactions is set
forth in our Current Report on Form 8-K filed with the SEC on February 14, 2020.
The
Business Combination is a subsequent event that occurred after the periods for which the financial information herein is presented. However, an annual report on Form 10-K, including consolidated financial statements of Gores Holdings III, Inc. for
the periods presented herein, is required to be filed with the Securities and Exchange Commission (SEC). The Companys financial statement presentation to be included in quarterly and annual filings with the SEC on Forms 10-Q and
10-K with respect to periods subsequent to the Business Combination will include the consolidated financial statements of Shay and its subsidiaries for periods prior to the completion of the Business Combination and of PAE Incorporated for periods
from and after the Closing Date. The financial information included in this Managements Discussion and Analysis of Financial Condition and Results of Operations reflects the historical operations of Gores Holdings III, Inc., the
legal acquirer, unless otherwise noted.
Results of Operations
For the calendar years ended December 31, 2019 and 2018, and the period from October 23, 2017 (inception) to December 31, 2017,
we had a net income (loss) of $1,458,376, $1,736,729 and $(23,684), respectively. Our activities during these periods mainly consisted of identifying and evaluating prospective acquisition candidates for a Business Combination. We generated
$8,488,158, $2,609,060 and $0 in interest income for the calendar years ended December 31, 2019 and 2018 and the period from October 23, 2017 (inception) to December 31, 2017 respectively.
As indicated in the accompanying consolidated financial statements, as of December 31, 2019 and 2018, we had $244,960 and $856,182,
respectively, in cash.
Liquidity and Capital Resources
In November 2017, our Sponsor purchased an aggregate of 10,781,250 Founder Shares for an aggregate purchase price of $25,000, or approximately
$0.002 per share. Subsequently, our Sponsor transferred an aggregate of 75,000 Founder Shares to Messrs. Randall Bort, William Patton and Jeffrey Rea, our former independent directors. On October 22, 2018, following the expiration of the
unexercised portion of the underwriters over-allotment option, our Sponsor forfeited 781,250 Founder Shares so that the remaining Founder Shares held by our Initial Stockholders represented 20.0% of the outstanding shares upon IPO Closing
Date.
On September 11, 2018, we consummated our IPO of 40,000,000 Units at a price of $10.00 per Unit, including 2,500,000 Units as
a result of the underwriters partial exercise of their over-allotment option, generating gross proceeds of $400,000,000. On the IPO Closing Date, we completed the private sale of an aggregate of 6,666,666 Private Placement Warrants, each
exercisable to purchase one share of Common Stock at $11.50 per share, to our Sponsor, at a price of $1.50 per Private Placement Warrant, generating gross proceeds, before expenses, of $10,000,000. After deducting the underwriting discounts and
commissions (excluding any deferred underwriting commissions (the Deferred Discount), which amount became payable upon consummation of the Business Combination) and the estimated offering expenses, the total net proceeds from our
IPO and the sale of the Private Placement Warrants were 401,100,000, of which $400,000,000 (or $10.00 per share sold in the IPO) was placed in the Trust Account. The amount of proceeds not deposited in the Trust Account was $1,100,000 at the closing
of our IPO. Interest earned on the funds held in the Trust Account may be released to us to fund our regulatory compliance requirements and other costs related thereto (Regulatory Withdrawals) (subject to an annual limit of
$750,000, for a maximum of 24 months) and/or additional amounts necessary to pay our franchise and income taxes.
On November 3,
2017, our Sponsor loaned us an aggregate of $150,000 by the issuance of an unsecured promissory note for $150,000 to cover expenses related to the IPO, and on August 30, 2018, our Sponsor loaned us an additional $150,000 by the issuance of a
second unsecured promissory note for $150,000 to cover expenses related to the IPO (collectively, the Notes). These Notes were non-interest bearing and payable on the earlier of
November 30, 2018 or the completion of the IPO. These Notes were repaid in full upon the completion of the IPO.
As of
December 31, 2019 and 2018, we had cash held outside of the Trust Account of $244,960 and $856,182, respectively, which is available to fund our working capital requirements.
As of December 31, 2019 and 2018, the Company had current liabilities of $4,517,373 and $687,370, respectively and working capital of
($4,187,865) and $375,661, respectively, largely due to amounts owed to professionals, consultants, advisors and others who were working on seeking a Business Combination.
Off-balance sheet financing arrangements
We have no obligations, assets or liabilities which would be considered off-balance sheet arrangements
as of December 31, 2019 and 2018. 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 entered into any non-financial
agreements involving assets as of December 31, 2019 and 2018.
42