View:
United States securities and exchange commission logo
November 9, 2022
Michael Blitzer
Co-Chief Executive Officer
Inflection Point Acquisition Corp.
34 East 51st Street, 5th Floor
New York, NY 10022
Re: Inflection Point
Acquisition Corp.
Registration
Statement on Form S-4
Filed October 13,
2022
File No. 333-267846
Dear Michael Blitzer:
We have reviewed your registration statement and have the
following comments. In
some of our comments, we may ask you to provide us with information so
we may better
understand your disclosure.
Please respond to this letter by amending your registration
statement and providing the
requested information. If you do not believe our comments apply to your
facts and
circumstances or do not believe an amendment is appropriate, please tell
us why in your
response.
After reviewing any amendment to your registration statement and
the information you
provide in response to these comments, we may have additional comments.
Form S-4 filed October 13, 2022
What equity stake, page 14
1. Clarify how the
information in tables would change assuming issuance of all securities
under all agreements,
such as the forward purchase agreement.
Comparative Historical and Unaudited Pro Forma Combined Per Share
Information of Inflection
Point and Intuitve Machines, page 52
2. Refer to the tables for
the six months ended June 30, 2022 and the year ended December
31, 2021. Please expand
the tables to include or provide a note that describes Inflection
Point's (IPAX
Historical) use of the two-class method for net losses per ordinary share as
shown in their
historical financial statements relative to the net losses per ordinary
share, common shares
outstanding, and weighted average common shares outstanding as
Michael Blitzer
FirstName LastNameMichael Blitzer
Inflection Point Acquisition Corp.
Comapany 9,
November NameInflection
2022 Point Acquisition Corp.
November
Page 2 9, 2022 Page 2
FirstName LastName
shown in the IPAX Historical columns here.
Intuitive Machines and New Intuitive Machines will be controlled, page 86
3. Please present the risk described in the last paragraph in a separate
appropriately
captioned risk factor.
Redemption Rights, page 100
4. Reconcile the 20% reference here with the 15% reference in your IPO
prospectus.
Background of the Business Combination, page 131
5. We note your disclosure that Citi has not affirmatively waived the
deferred underwriting
discount and that Inflection Point does not intend to pay said
discount to Citi. Please
disclose the potential risk of litigation stemming from this decision
in your risk factors
section. Also disclose in the risk factors the amount of the deferred
fee.
Projected Financial Information, page 143
6. We note the material assumptions you describe. Please expand to
clarify how these
assumptions resulted in the projected financial information you
disclosure. Provide
quantitative disclosure to the extent possible. For example, what
value did you assign to
each of the contract wins you mention?
U.S. Federal Income Tax Considerations, page 170
7. As to each of the matters described in this section, please file the
exhibit required by Item
601(b)(8) of Regulation S-K. Refer to Staff Legal Bulletin No. 19 for
guidance on the
content and requirements for that exhibit. As one example only, it is
insufficient to state
merely what the parties "intend" as it relates to the tax treatment.
Instead, disclose clearly
the tax consequences. While it is permissible to disclose what the
consequences "should"
be or that they are "more likely than not," additional disclosure
regarding the reasons for
the uncertainty and risks should be included. Please revise.
Unaudited Pro Forma Condensed Combined Financial Information, page 188
8. Please revise the disclosures on page 189 to more fully explain how
you determined the
number of shares that are assumed to be redeemed under the maximum
redemption
scenario, including whether the shares that are not assumed to be
redeemed relate to the
2.9 million IPO shares acquired by Kingstown 1740 Fund, an affiliate
of the Sponsor, and
why you assumed those shares will not be redeemed. Please also explain
here, and in the
notes to the historical financial statements, why it appears Kingstown
1740 Fund waived
its redemption rights for only a portion of the IPO shares they
acquired.
9. Please more fully explain to us how and why you determined not to
reflect the potential
Michael Blitzer
FirstName LastNameMichael Blitzer
Inflection Point Acquisition Corp.
Comapany 9,
November NameInflection
2022 Point Acquisition Corp.
November
Page 3 9, 2022 Page 3
FirstName LastName
impact of Tax Receivable Agreement in the pro forma financial
statements.
Note to Unaudited Pro Forma Condensed Combined Financial Statements
2. Adjustments and Assumptions to the Unaudited Pro Forma Condensed
Consolidated
Combined Balance Sheet, page 197
10. Please expand Note 2.B to reconcile the issuance of 2.2 million shares
of Series A
Preferred Stock with the 26,000 shares to be issued as disclosed on
page 6, under
Frequently Used Terms, and elsewhere in the filing. Also, please more
fully explain the
terms of the Series A Preferred Stock, including why it is classified
as temporary
equity, the terms and circumstances under which it may become
permanent equity or be
redeemed, and why the related warrants will be equity-classified
without future re-
measurement.
11. Refer to Note 2.E. Please clarify the number of shares of Class A
common stock that the
SAFE liability was converted into and explain how the conversion rate
was
determined. Please also include within the pro forma footnotes a table
of the total number
of shares of Class A, Class B, and Class C common stock to be issued
and outstanding
assuming No redemption and assuming Maximum redemption of the Class A
public
shares. The table should include each shareholder type, such as Public
Stockholders,
Sponsor, PIPE Investors, Intuitive Machines Members excluding
founders, and Intuitive
Machines Founders. A table should also be provided in Note 4 on page
199 to disclose
the number of options, warrants, earn-out consideration, and other
dilutive securities
excluded from pro forma net losses for each period for both the No
redemption and
Maximum redemption scenarios.
12. Refer to Note 2.I. Please explain the difference of 24.9 million
shares between the
113,285,417 shares in the denominator assuming No redemptions and the
88,338,622
shares in the denominator assuming Maximum redemption, with the total
Public Shares to
be redeemed of 30.0 million shares, which we assume relates to the
additional shares
issued in note 2.L. Please also reconcile how you arrived at the total
number of Intuitive
Machines OpCo Common Units issued at Closing and the denominator which
is inclusive
of the total New Intuitive Machines Class A common stock in the post
combination
company. In addition, please more fully explain to us your
computations of net assets as
shown in this note with the net assets shown in the pro forma balance
sheet on page 194.
13. Refer to Note 2.L. Please describe this adjustment as pertaining to
the Equity Facility as
discussed on page 192, and clarify also on page 192 that you have
included the entire
$50.0 in expected proceeds from the facility under the Maximum
redemption scenario.
Please also explain in Note 2.L if there are any conditions or
circumstances under the
Maximum redemption scenario in which the additional 5.1 million shares
on class A
common stock would not be issued.
Michael Blitzer
FirstName LastNameMichael Blitzer
Inflection Point Acquisition Corp.
Comapany 9,
November NameInflection
2022 Point Acquisition Corp.
November
Page 4 9, 2022 Page 4
FirstName LastName
14. Refer to note 2.G. Please more fully explain how you determined the
fair value of the
Earnout shares. Please also revise your disclosures here and in note
3.EE to address the
factors that will result in changes in the fair value of the Earnout
shares and disclose and
discuss how the changes would impact the pro forma financial
statements.
3. Adjustments and Assumptions to the Unaudited Pro Forma Condensed Combined
Statement
of Operations, page 198
15. Refer to Note 3.CC. Please more fully explain the differences in the
net losses as shown
in this note with the net losses shown in the pro forma statements of
operations on pages
195 and 196.
Related Party Redemption Waiver Agreement, page 217
16. Please revise throughout to clarify whether this agreement is
inclusive or exclusive of the
non-redemption agreement entered into during September 2022.
Forward Purchase Agreement, page 218
17. Please clarify the "future events" the issuance of securities is
contingent upon. It is
unclear from your disclosure why you will not or may not issue the
securities.
Manufacturing, Assembly and Operations, page 251
18. We note the new facility you mention. Please clarify the cost to
construct it and the
source or sources of capital you intend to use.
Intellectual Property, page 252
19. Please revise to clarify the material terms of the licenses mentioned
in this section,
including the claims covered by the patents you mention, duration of
the agreements and
the amounts due in exchange for the license.
Management's Discussion and Analysis of Financial Condition and Results of
Operations of
Intuitive Machines
Backlog, page 256
20. Please clarify and reconcile the backlog amounts disclosed and
discussed in MD&A
relative to the remaining performance obligations as of each balance
sheet date disclosed
in the notes to the annual and interim financial statements.
Results of Operations, page 260
21. Please revise the discussion of the results of operations to more
fully address the
following:
Provide a summary of the material contracts that impacted results
of operations that
includes the amounts of revenue recognized during each period,
the remaining
Michael Blitzer
FirstName LastNameMichael Blitzer
Inflection Point Acquisition Corp.
Comapany 9,
November NameInflection
2022 Point Acquisition Corp.
November
Page 5 9, 2022 Page 5
FirstName LastName
amounts of revenue to be recognized, and the estimated completion
dates;
Explain the facts and circumstances that resulted in the
contract losses recorded
during the year ended December 31, 2021 and the period ended June
30, 2022,
including the reasons why initial cost estimates were required to
be revised;
Disclose and discuss changes in cost of revenue as a percent of
revenue; and
Clarify the disclosure related to "contract loss amortization"
since we assume contract
losses are recorded when evident.
Inflection Point Acquisition Corp. Notes to Financial Statements
Note 1 - Organization, Business Operations and Going Concern, page F-9
22. We note that certain shareholders agreed to waive their redemption
rights. Please describe
any consideration provided in exchange for this agreement.
Consolidated Financial Statements - Intuitive Machines
2. Summary of Significant Accounting Policies and Recent Accounting
Pronouncements
Revenue Recognition, page F-52
23. In regard to the disclosures related to contract costs, please more
fully explain the nature
and circumstances when certain costs are capitalized and amortized
across the life of the
contract.
24. In regard to the disclosures related to contract estimates and
modifications, please clarify
if and how the contract losses disclosed on page F-54 are related
to/included in the
contract losses disclosed in Note 3.
3. Revenue , page F-57
25. Please disclose the amount of revenue recognized during each period
presented that was
included in contract liabilities at the beginning of each period as
required by ASC 606-10-
50-8.
General
26. We note the Series A preferred stock investment described throughout
your document.
Please revise to clarify whether that series will remain outstanding
after the transactions
described in your disclosure. In this regard, the chart on page 33
indicates preferred stock
will be outstanding, but your disclosure on page 223 states that no
shares of preferred
stock will be outstanding.
27. It appears that underwriting fees remain constant and are not adjusted
based on
redemptions. Revise your disclosure to disclose the effective
underwriting fee on a
percentage basis for shares at each redemption level presented in your
disclosure.
28. With a view toward disclosure, please tell us whether your sponsor is,
is controlled by, or
has substantial ties with a non-U.S. person. Please also tell us
whether anyone or any
entity associated with or otherwise involved in the transaction, is,
is controlled by, or has
Michael Blitzer
FirstName LastNameMichael Blitzer
Inflection Point Acquisition Corp.
Comapany 9,
November NameInflection
2022 Point Acquisition Corp.
November
Page 6 9, 2022 Page 6
FirstName LastName
substantial ties with a non-U.S. person. If so, also include risk
factor disclosure that
addresses how this fact could impact your ability to complete your
initial business
combination. For instance, discuss the risk to investors that you may
not be able to
complete an initial business combination with a U.S. target company
should the
transaction be subject to review by a U.S. government entity, such as
the Committee on
Foreign Investment in the United States (CFIUS), or ultimately
prohibited. Further,
disclose that the time necessary for government review of the
transaction or a decision to
prohibit the transaction could prevent you from completing an initial
business
combination and require you to liquidate. Disclose the consequences of
liquidation to
investors, such as the losses of the investment opportunity in a
target company, any price
appreciation in the combined company, and the warrants, which would
expire worthless.
29. Please expand to identify the principal factors contributing to any
inflationary pressures
the target company has experienced and clarify the resulting impact to
it. Please revise to
identify actions planned or taken, if any, to mitigate inflationary
pressures.
30. Please disclose whether you are subject to material cybersecurity
risks in your supply
chain based on third-party products, software, or services used in
your products, services,
or business and how a cybersecurity incident in your supply chain
could impact your
business. Discuss the measures you have taken to mitigate these risks.
31. Please provide us with any correspondence between you and Citi
relating to Citi's refusal
to serve as financial advisor and refusal to waive its deferred fee.
32. Please revise your disclosure to highlight for investors that Citi's
refusal to serve as
financial advisor indicates that it does not want to be associated
with the disclosure or
underlying business analysis related to the transaction. In addition,
revise your disclosure
to caution investors that they should not place any reliance on the
fact that Citi had been
previously involved with the SPAC.
33. Please discuss the potential impact on the transaction related to
Citi's refusal to serve as
financial advisor. We note that Citi was an underwriter for the IPO of
the SPAC. If Citi
would have played a role in the closing, please revise to identify the
party who will be
filling Citi's role.
34. Please describe what relationship existed between Citi and the SPAC
after the close of the
IPO, including any financial or merger-related advisory services
conducted by Citi. For
example, clarify whether Citi had any role in the identification or
evaluation of business
combination targets.
35. Tell us whether Citi was involved in the preparation of any disclosure
that is included in
the Form S-4 registration statement, including any analysis underlying
disclosure in the
registration statement. If so, clarify their involvement, whether they
have retracted any
work product associated with the transaction, and the risk of such
withdrawal and reliance
on their expertise. Further, if true, please clarify that Citi claims
no role in the SPAC s
business combination transaction and has affirmatively disclaimed any
responsibility for
Michael Blitzer
Inflection Point Acquisition Corp.
November 9, 2022
Page 7
any of the disclosure in this registration statement.
We remind you that the company and its management are responsible for
the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action
or absence of
action by the staff.
Refer to Rules 460 and 461 regarding requests for acceleration. Please
allow adequate
time for us to review any amendment prior to the requested effective date of
the registration
statement.
You may contact Beverly Singleton at 202-551-3328 or Anne McConnell at
202-551-
3709 if you have questions regarding comments on the financial statements and
related
matters. Please contact Alex King at 202-551-8631 or Geoffrey Kruczek at
202-551-3641 with
any other questions.
Sincerely,
FirstName LastNameMichael Blitzer
Division of
Corporation Finance
Comapany NameInflection Point Acquisition Corp.
Office of
Manufacturing
November 9, 2022 Page 7
cc: Joel Rubinstein
FirstName LastName