SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
FORM10-Q
(MARK ONE)Mark One)
| | | | | |
| ☒ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the
quarterquarterly period ended
SeptemberJune 30,
20192022OR
☐ | | | | | |
| o | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the transition period fromto
Commission file number:number 001-39113
OSPREY
BLACKSKY TECHNOLOGY ACQUISTION CORP.INC.
(Exact
Namename of
Registrantregistrant as
Specifiedspecified in
Its Charter)its charter) | | | | | |
| Delaware | | 83-183376047-1949578 |
(State or other jurisdiction of incorporation or organization) | | Identification No.) |
13241 Woodland Park Road Suite 300 Herndon, Virginia | 20171 |
| (Address of Principal Executive Offices) | (Zip Code) |
1845 Walnut Street, 10th Floor
Philadelphia, PA 19103
(Address of principal executive offices)
(212) 920 -1345
(Issuer’s
(571) 267-1571
Registrant’s telephone number)number, including area code
Securities registered pursuant to Section 12(b) of the Act:
| | | | | | | | |
Title of each class | Trading Symbol(s) | Trading
Symbol(s)
| | Name of each exchange on which registered |
Units,Class A common stock, par value $0.0001 per share | BKSY | The New York Stock Exchange |
Warrants, each consisting ofwhole warrant exercisable for one share of Class A common stock $0.0001 par value per share, andone-halfat an exercise price of one redeemable warrant$11.50 | BKSY.W | SFTW.U | | The New York Stock Exchange |
Check
Indicate by check mark whether the issuerregistrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the pastpreceding 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 ☐ý No ☒o Indicate by check mark whether the registrant has submitted electronically and posted on its corporate web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of RegulationS-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ý No ☐o 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”,filer,” “accelerated filer”
, and “smaller reporting company”
, and “emerging growth company” in
Rule 12b-2 of the Exchange Act.
(Check one): | | | | | | | | | | | |
| Large accelerated filer | | ☐ | o | Accelerated filer | | ☐ |
| | | o |
| 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 to Section 13(a) of the Exchange Act. ☐o Indicate by check mark whether the registrant is a shell company (as defined in Rule12b-2 of the Exchange Act). Yes ☒.Yes o No ☐ý
As of December 11, 2019, 39,531,250August 09, 2022, there were 120,948,826 shares of the registrant’s class A common stock, at $0.0001 par value, $0.0001 per share were issued and outstanding.
OSPREY TECHNOLOGY ACQUISITION CORP.
FORM10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 2019
Table of Contents
PART I - FINANCIAL INFORMATION
Item 1. Interim Financial Statements.
OSPREY TECHNOLOGY ACQUISITION CORP.
CONDENSED BALANCE SHEETS
| | | | | | | | |
| | | September 30,
2019 | | | December 31,
2018 | |
| | | (unaudited) | | | | |
ASSETS | | | | | | | | |
Current asset—cash | | $ | 35,405 | | | $ | 42,061 | |
Deferred offering costs | | | 435,983 | | | | 172,277 | |
| | | | | | | | |
Total Assets | | $ | 471,388 | | | $ | 214,338 | |
| | | | | | | | |
LIABILITIES AND STOCKHOLDER’S EQUITY | | | | | | | | |
Current liabilities | | | | | | | | |
Accrued expenses | | $ | 1,853 | | | $ | 1,488 | |
Accrued offering costs | | | 261,993 | | | | 90,027 | |
Promissory note—related party | | | 187,600 | | | | 100,000 | |
| | | | | | | | |
Total Current Liabilities | | | 451,446 | | | | 191,515 | |
| | | | | | | | |
Commitments (Note 6) | | | | | | | | |
Stockholder’s Equity | | | | | | | | |
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued and outstanding | | | — | | | | — | |
Class A Common stock, $0.0001 par value; 150,000,000 shares authorized; none issued and outstanding | | | — | | | | — | |
Class B Common stock, $0.0001 par value; 25,000,000 shares authorized; 7,906,250 and 9,487,500 shares issued and outstanding, respectively(1) | | | 791 | | | | 949 | |
Additionalpaid-in capital | | | 24,209 | | | | 24,051 | |
Accumulated deficit | | | (5,058 | ) | | | (2,177 | ) |
| | | | | | | | |
Total Stockholder’s Equity | | | 19,942 | | | | 22,823 | |
| | | | | | | | |
TOTAL LIABILITIES AND STOCKHOLDER’S EQUITY | | $ | 471,388 | | | $ | 214,338 | |
| | | | | | | | |
(1) | Included up to 1,031,250 and 1,237,500 shares, respectively, subject to forfeiture if the underwriters’ over-allotment option was not exercised in full or in part (see Notes 5 and 7).
|
The accompanying notes are an integral part
Table of the unaudited condensed financial statements.Contents
OSPREY TECHNOLOGY ACQUISITION CORP.
CONDENSEDSPECIAL NOTE REGARDING FORWARD LOOKING STATEMENTS OF OPERATIONS
(UNAUDITED)
| | | | | | | | | | | | |
| | | Three Months
Ended
September 30,
2019 | | | Nine Months
Ended
September 30,
2019 | | | For the Period
from June 15,
2018
(inception)
through
September 30,
2018 | |
Formation and operating costs | | $ | 1,061 | | | $ | 2,881 | | | $ | 798 | |
| | | | | | | | | | | | |
Net Loss | | $ | (1,061 | ) | | $ | (2,881 | ) | | $ | (798 | ) |
| | | | | | | | | | | | |
Weighted average shares outstanding, basic and diluted(1) | | | 6,875,000 | | | | 7,353,480 | | | | 8,250,000 | |
| | | | | | | | | | | | |
Basic and diluted net loss per share of common stock | | $ | (0.00 | ) | | $ | (0.00 | ) | | $ | (0.00 | ) |
| | | | | | | | | | | | |
(1) | Excluded an aggregate of up to 1,031,250 shares for the three and nine months ended September 30, 2019 and 1,237,500 shares for the period from June 15, 2018 (inception) through September 30, 2018 subject to forfeiture if the underwriters’ over-allotment option was not exercised in full or in part (see Notes 5 and 7).
|
The accompanying notes are an integral part of the unaudited condensed financial statements.
OSPREY TECHNOLOGY ACQUISITION CORP.
CONDENSED STATEMENT OF CHANGES IN STOCKHOLDER’S EQUITY
(UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, 2018 AND FOR THE PERIOD FROM JUNE 15, 2018 (INCEPTION) THROUGH SEPTEMBER 30, 2018
| | | | | | | | | | | | | | | | | | | | |
| | | Class B
Common Stock(1) | | | Additional
Paid-In
Capital | | | Accumulated
Deficit | | | Total
Stockholder’s
Equity | |
| | | Shares | | | Amount | | | | | | | | | | |
Balance—June 15, 2018 (inception) | | | — | | | $ | — | | | $ | — | | | $ | — | | | $ | — | |
Net loss | | | — | | | | — | | | | — | | | | (798 | ) | | | (798 | ) |
| | | | | | | | | | | | | | | | | | | | |
Balance—June 30, 2018 | | | — | | | $ | — | | | $ | — | | | $ | (798 | ) | | $ | (798 | ) |
Issuance of common stock to Sponsor | | | 9,487,500 | | | | 949 | | | | 24,051 | | | | — | | | | 25,000 | |
Net loss | | | — | | | | — | | | | — | | | | — | | | | — | |
| | | | | | | | | | | | | | | | | | | | |
Balance—September 30, 2018(1) | | | 9,487,500 | | | $ | 949 | | | $ | 24,051 | | | $ | (798 | ) | | $ | 24,202 | |
| | | | | | | | | | | | | | | | | | | | |
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019
| | | | | | | | | | | | | | | | | | | | |
| | | Class B
Common Stock(3) | | | Additional
Paid-In
Capital | | | Accumulated
Deficit | | | Total
Stockholder’s
Equity | |
| | | Shares | | | Amount | | | | | | | | | | |
Balance—January 1, 2019 | | | 9,487,500 | | | $ | 949 | | | $ | 24,051 | | | $ | (2,177 | ) | | $ | 22,823 | |
Net loss | | | — | | | | — | | | | — | | | | (801 | ) | | | (801 | ) |
| | | | | | | | | | | | | | | | | | | | |
Balance—March 31, 2019 | | | 9,487,500 | | | $ | 949 | | | $ | 24,051 | | | $ | (2,978 | ) | | $ | 22,022 | |
Forfeiture of common stock by Sponsor(2) | | | (1,581,250 | ) | | | (158 | ) | | | 158 | | | | — | | | | — | |
Net loss | | | — | | | | — | | | | — | | | | (1,019 | ) | | | (1,019 | ) |
| | | | | | | | | | | | | | | | | | | | |
Balance—June 30, 2019 | | | 7,906,250 | | | $ | 791 | | | $ | 24,209 | | | $ | (3,997 | ) | | $ | 21,003 | |
Net loss | | | — | | | | — | | | | — | | | | (1,061 | ) | | | (1,061 | ) |
| | | | | | | | | | | | | | | | | | | | |
Balance—September 30, 2019(3) | | | 7,906,250 | | | $ | 791 | | | $ | 24,209 | | | $ | (5,058 | ) | | $ | 19,942 | |
| | | | | | | | | | | | | | | | | | | | |
(1) | Included 1,237,500 shares subject to forfeiture if the underwriters’ over-allotment option was not exercised in full or in part (see Notes 5 and 7).
|
(2) | In April 2019, the Sponsor contributed back to the Company, for no consideration, 1,581,250 shares of Class B common stock (see Note 5).
|
(3) | Included 1,031,250 shares subject to forfeiture if the underwriters’ over-allotment option was not exercised in full or in part (see Notes 5 and 7).
|
The accompanying notes are an integral part of the unaudited condensed financial statements.
OSPREY TECHNOLOGY ACQUISITION CORP.
STATEMENTS OF CASH FLOWS
CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
| | | | | | | | |
| | | Nine Months
Ended
September 30,
2019 | | | For the Period
from June 15,
2018
(inception)
through
September 30,
2018 | |
Cash Flows from Operating Activities: | | | | | | | | |
Net loss | | $ | (2,881 | ) | | $ | (798 | ) |
Changes in operating assets and liabilities: | | | | | | | | |
Accrued expenses | | | 365 | | | | 798 | |
| | | | | | | | |
Net cash used in operating activities | | | (2,516 | ) | | | — | |
| | | | | | | | |
Cash Flows from Financing Activities: | | | | | | | | |
Proceeds from issuance of common stock to Sponsor | | | — | | | | 25,000 | |
Proceeds from promissory note—related party | | | 87,600 | | | | — | |
Payment of offering costs | | | (91,740 | ) | | | (17,500 | ) |
| | | | | | | | |
Net cash (used in) provided by financing activities | | | (4,140 | ) | | | 7,500 | |
| | | | | | | | |
Net Change in Cash | | | (6,656 | ) | | | 7,500 | |
Cash—Beginning | | | 42,061 | | | | — | |
| | | | | | | | |
Cash—Ending | | $ | 35,405 | | | $ | 7,500 | |
| | | | | | | | |
Non-cash investing and financing activities: | | | | | | | | |
Deferred offering costs included in accrued offering costs | | $ | 171,966 | | | $ | 16,163 | |
| | | | | | | | |
The accompanying notes are an integral part of the unaudited condensed financial statements.
OSPREY TECHNOLOGY ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2019
(Unaudited)
Note 1—Description of OrganizationThis Quarterly Report on Form 10-Q contains, and Business Operations
Osprey Technology Acquisition Corp. (formerly known as Osprey Energy Acquisition Corp. II) (the “Company”) was incorporated in Delaware as a blank check company under the name “Osprey Acquisition Corp. II” on June 15, 2018. The Company changed its nameour officers and representatives may from time to “Osprey Energy Acquisition Corp. II” on September 27, 2018 and then to “Osprey Technology Acquisition Corp.” on June 17, 2019. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”).
To date, the Company’s efforts have been limited to organizational activities and activities relating to the initial public offering. The Company has not identified any acquisition target and has not, nor has anyone on its behalf, initiated any discussions, directly or indirectly, with respect to identifying any acquisition target. The Company has generated no revenues to date and it does not expect that it will generate operating revenues until it consummates an initial business combination at the earliest. Although the Company may pursue an acquisition opportunity in any business or industry, it intends to focus on opportunities in the technology sector, particularly companies pursuing aSoftware-as-a-Service (“SaaS”) model.
As of September 30, 2019, the Company had not yet commenced operations. All activity for the period from June 15, 2018 (inception) through September 30, 2019 relates to the Company’s formation and the initial public offering (the “Initial Public Offering”), which is described below.
The registrationtime make, forward-looking statements for the Company’s Initial Public Offering were declared effective on October 31, 2019. On November 5, 2019, the Company consummated the Initial Public Offering of 27,500,000 units (the “Units” and, with respect to the shares of Class A common stock included in the Units sold, the “Public Shares”), at $10.00 per Unit, generating gross proceeds of $275,000,000, which is described in Note 3.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 7,500,000 warrants (the “Private Placement Warrants”) at a price of $1.00 per Private Placement Warrant in a private placement to Osprey Sponsor II, LLC (the “Sponsor”), generating gross proceeds of $7,500,000, which is described in Note 4.
Following the closing of the Initial Public Offering on November 5, 2019, an amount of $275,000,000 ($10.00 per Unit) from the net proceeds of the sale of the Units in the Initial Public Offering and the sale of the Private Placement Warrants was placed in a trust account (the “Trust Account”), which will be invested in U.S. government securities, within the meaning set forth inof Section 2(a)(16)27A of the Investment Company Act, with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund meeting the conditions of Rule2a-7 of the Investment CompanySecurities Act of 1940,1933, as amended (the “Investment Company“Securities Act”), as determined by the Company, until the earlier of: (i) the completion of a Business Combination or (ii) the distribution of the Trust Account, as described below.
On November 11, 2019, the underwriters notified the Company of their intention to exercise their over-allotment option in full on November 13, 2019. As such, on November 13, 2019, the Company consummated the sale of an additional 4,125,000 Units, at $10.00 per Unit, and the sale of an additional 825,000 Private Placement Warrants, at $1.00 per Private Placement Warrant, generating total gross proceeds of $42,075,000. A total of $41,250,000 of the net proceeds was deposited into the Trust Account, bringing the aggregate proceeds held in the Trust Account to $316,250,000.
Transaction costs for the Initial Public Offering amounted to $18,047,876 consisting of $6,325,000 of underwriting fees, $11,068,750 of deferred underwriting fees and $654,126 of other offering costs. In addition, $1,126,709 of cash was held outside of the Trust Account and is available for working capital purposes.
The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. The Company’s initial Business Combination must be with one or more target businesses that together have a fair market value equal to at least 80% of the balance in the Trust Account (excluding the deferred underwriting fees and taxes payable on income earned on the Trust Account) at the time of the signing an agreement to enter into a Business Combination. The Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target sufficient for it not to be required to register as an investment company under the Investment Company Act 1940. There is no assurance that the Company will be able to complete a Business Combination successfully.
OSPREY TECHNOLOGY ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2019
(Unaudited)
The Company will provide its holders of the outstanding Public Shares (the “public stockholders”) with the opportunity to redeem all or a portion of their Public Shares upon the completion of a Business Combination either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company, solely in its discretion. The public stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then on deposit in the Trust Account (initially $10.00 per Public Share, plus any pro rata interest earned on the funds held in the Trust Account and not previously released to the Company to pay its franchise and income tax obligations). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants.
The Company will proceed with a Business Combination if the Company has net tangible assets of at least $5,000,001 upon such consummation of a Business Combination and, if the Company seeks stockholder approval, a majority of the outstanding shares voted are voted in favor of the Business Combination. If a stockholder vote is not required by law and the Company does not decide to hold a stockholder vote for business or other legal reasons, the Company will, pursuant to its Amended and Restated Certificate of Incorporation, conduct the redemptions pursuant to the tender offer rules of the U.S. Securities and Exchange Commission (the “SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by law, or the Company decides to obtain stockholder approval for business or legal reasons, the Company will offer to redeem Public Shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Company’s Sponsor has agreed to vote its Founder Shares (as defined below in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each public stockholder may elect to redeem their Public Shares irrespective of whether they vote for or against the proposed transaction.
Notwithstanding the foregoing, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Company’s Amended and Restated Certificate of Incorporation provides that a public stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 1321E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which statements involve substantial risks and uncertainties. All statements contained in this Quarterly Report on Form 10-Q other than statements of historical fact, including statements regarding our future results of operations and financial position, our business strategy and plans, and our objectives for future operations, are forward-looking statements. The words “believe,” “may,” “will,” “potentially,” “estimate,” “continue,” “anticipate,” “plan,” “intend,” “could,” “would,” “expect” and similar expressions that convey uncertainty of future events or outcomes are intended to identify forward-looking statements. Forward-looking statements included in this Quarterly Report on Form 10-Q include, but are not limited to, statements regarding:
• our ability to retain or recruit key employees;
• our ability to grow distribution channels and partner ecosystems;
• our anticipated capital expenditures, liquidity, and our estimates regarding our capital requirements;
• our ability to integrate proprietary and third-party sensor data;
• our ability to add new satellites to commercial operations;
• our ability to invest in our software, research and development capabilities;
• our ability to grow a third-party developer community;
• our ability to expand our services and offerings to customers both domestically and internationally;
• our ability to continue delivering data in a cost-effective manner;
• our ability to maintain and protect our brand;
• our ability to expand within our current customer base;
• our ability to compete with legacy satellite imaging providers and other emergent geospatial intelligence providers;
• our ability to maintain intellectual property protection for our products or avoid or defend claims of infringement;
• our ability to comply with laws and regulations applicable to our business;
• our expectations about market trends and needs;
• our estimates of market growth, future revenue, expenses, cash flows, capital requirements and additional financing;
• the volatility of the trading price of our common stock;
• the performance of our Spectra AI platform;
• our plans for our next generation satellites (“Gen-3”),;
• the impact of local, regional, national and international economic conditions and events;
• the effect of COVID-19 on the foregoing; and
• other factors including but not limited to those detailed under the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021 and filed by us with the Securities and Exchange Commission (the “SEC”) on March 31, 2022.
We have based these forward-looking statements largely on our current expectations and projections about future events and trends that we believe may affect our financial condition, results of operations, business strategy, short-term and long-term business operations and objectives and financial needs. These forward-looking statements are subject to a number of risks, uncertainties and assumptions, including those described in Part I, Item 1A. “Risk
Factors” in our Annual Report on Form 10-K for the year ended December 31, 2021. Moreover, we operate in a very competitive and rapidly changing environment. New risks emerge from time to time. It is not possible for us to predict all risks, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements we may make. In light of these risks, uncertainties and assumptions, the forward-looking events and trends discussed in this Quarterly Report on Form 10-Q may not occur and actual results could differ materially and adversely from those anticipated or implied in the forward-looking statements.
You should not rely upon forward-looking statements as predictions of future events. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee that the future results, performance, or events and circumstances reflected in the forward-looking statements will be achieved or occur. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, whether written or oral, except as required by law.
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
BLACKSKY TECHNOLOGY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(unaudited)
(in thousands, except par value)
| | | | | | | | | | | |
| June 30, | | December 31, |
| 2022 | | 2021 |
| Assets | | | |
| Current assets: | | | |
| Cash and cash equivalents | $ | 64,827 | | | $ | 165,586 | |
| Restricted cash | 2,518 | | 2,518 |
| Short-term investments | 43,833 | | — |
| Accounts receivable, net of allowance of $0 and $39, respectively | 3,417 | | 2,629 |
| Prepaid expenses and other current assets | 4,275 | | 6,264 |
| Contract assets | 5,502 | | 1,678 |
| Total current assets | 124,372 | | 178,675 |
| Property and equipment - net | 83,899 | | 70,551 |
| Goodwill | 9,393 | | 9,393 |
| Investment in equity method investees | 5,159 | | 4,002 |
| Intangible assets - net | 2,199 | | 2,480 |
| Satellite procurement work in process | 35,761 | | 40,102 |
| Other assets | 346 | | | 560 | |
| Total assets | $ | 261,129 | | | $ | 305,763 | |
| Liabilities and stockholders’ equity | | | |
| Current liabilities: | | | |
| Accounts payable and accrued liabilities | $ | 13,877 | | | $ | 10,837 | |
| Amounts payable to equity method investees | 1,537 | | 5,613 |
| Contract liabilities - current | 4,931 | | 11,266 |
| Other current liabilities | 2,835 | | 2,819 |
| Total current liabilities | 23,180 | | 30,535 |
| Liability for estimated contract losses | 3,384 | | 6,054 |
| Long-term contract liabilities | — | | 568 |
| Derivative liabilities | 13,431 | | 16,925 |
| Long-term debt - net of current portion | 72,425 | | 71,408 |
| Other liabilities | 5,162 | | 653 |
| Total liabilities | 117,582 | | 126,143 |
| Commitments and contingencies (Note 17) | 0 | | 0 |
| Stockholders’ equity: | | | |
| | | |
| Class A common stock, $0.0001 par value-authorized, 300,000 shares; issued, 120,926 and 117,160 shares; outstanding, 118,453 shares and 114,452 shares as of June 30, 2022 and December 31, 2021, respectively. | 12 | | 11 |
| Additional paid-in capital | 660,710 | | 650,518 |
| Accumulated deficit | (517,175) | | (470,909) |
| Total stockholders’ equity | 143,547 | | 179,620 |
| Total liabilities and stockholders’ equity | $ | 261,129 | | | $ | 305,763 | |
See notes to unaudited condensed consolidated financial statements
BLACKSKY TECHNOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited)
(in thousands, except per share amounts)
| | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | Six Months Ended June 30, |
| 2022 | | 2021 | | 2022 | | 2021 |
| Revenue | | | | | | | |
| Imagery & software analytical services | $ | 13,350 | | | $ | 5,118 | | | $ | 23,122 | | | $ | 11,116 | |
| Engineering & systems integration | 1,752 | | | 2,247 | | | 5,876 | | | 3,543 | |
| Total revenue | 15,102 | | | 7,365 | | | 28,998 | | | 14,659 | |
| Costs and expenses | | | | | | | |
| Imagery & software analytical service costs, excluding depreciation and amortization | 5,350 | | | 4,171 | | | 11,257 | | | 8,550 | |
| Engineering & systems integration costs, excluding depreciation and amortization | 4,436 | | | 2,237 | | | 9,484 | | | 3,367 | |
| | | | | | | |
| Selling, general and administrative | 17,739 | | | 8,827 | | | 40,275 | | | 17,305 | |
| Research and development | 106 | | | — | | | 252 | | | 28 | |
| Depreciation and amortization | 9,177 | | | 3,537 | | | 16,568 | | | 6,301 | |
| Satellite impairment loss | — | | | 18,407 | | | — | | | 18,407 | |
| Operating loss | (21,706) | | | (29,814) | | | (48,838) | | | (39,299) | |
| | | | | | | |
| (Loss) gain on derivatives | (4,646) | | | (967) | | | 3,494 | | | (14,975) | |
| Income on equity method investment | 1,213 | | | 767 | | | 1,470 | | | 963 | |
| Interest income | 178 | | | — | | | 178 | | | — | |
| Interest expense | (1,275) | | | (1,270) | | | (2,530) | | | (2,438) | |
| Other expense, net | (42) | | | (3,279) | | | (40) | | | (147,370) | |
| Loss before income taxes | (26,278) | | | (34,563) | | | (46,266) | | | (203,119) | |
| Income tax (expense) benefit | — | | | — | | | — | | | — | |
| Loss from continuing operations | (26,278) | | | (34,563) | | | (46,266) | | | (203,119) | |
| Discontinued operations: | | | | | | | |
| Loss from discontinued operations (including loss from disposal of Spaceflight Inc. of $0, $1,022, $0, and $1,022 for the three and six months ended June 30, 2022 and 2021, respectively) | — | | | (1,022) | | | — | | | (1,022) | |
| Income tax (expense) benefit | — | | | — | | | — | | | — | |
| Loss from discontinued operations, net of income taxes | — | | | (1,022) | | | — | | | (1,022) | |
| Net loss | (26,278) | | | (35,585) | | | (46,266) | | | (204,141) | |
| Other comprehensive loss | — | | | (1,930) | | | — | | | (541) | |
| Total comprehensive loss | $ | (26,278) | | | $ | (37,515) | | | $ | (46,266) | | | $ | (204,682) | |
| | | | | | | |
| Basic and diluted loss per share of common stock: | | | | | | | |
| | | | | | | |
| | | | | | | |
| Loss from continuing operations | $ | (0.22) | | | $ | (0.61) | | | $ | (0.40) | | | $ | (3.87) | |
| Loss from discontinued operations, net of income taxes | — | | | (0.02) | | | — | | | (0.02) | |
| Net loss per share of common stock | $ | (0.22) | | | $ | (0.63) | | | $ | (0.40) | | | $ | (3.89) | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
See notes to unaudited condensed consolidated financial statements
BLACKSKY TECHNOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)
(unaudited)
(in thousands)
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Common Stock | | Additional Paid-In | | Other Comprehensive | | Accumulated | | Total Stockholders' |
| | Shares | | Amount | | Capital | | Income | | Deficit | | Equity |
| Balance as of January 1, 2022 | | 114,452 | | | $ | 11 | | | $ | 650,518 | | | $ | — | | | $ | (470,909) | | | $ | 179,620 | |
| Stock-based compensation | | — | | | — | | | 10,862 | | | — | | | — | | | 10,862 | |
| Issuance of common stock upon exercise of stock options | | 404 | | | — | | | 17 | | | — | | | — | | | 17 | |
| Issuance of common stock upon vesting of restricted stock awards | | 129 | | | — | | | — | | | — | | | — | | | — | |
| Issuance of common stock upon vesting of restricted stock units | | 4,816 | | | 1 | | | — | | | — | | | — | | | 1 | |
| Withholding of restricted stock units to satisfy tax withholding obligations upon the vesting of restricted stock units | | (1,874) | | | — | | | (3,616) | | | — | | | — | | | (3,616) | |
| Net loss | | — | | | — | | | — | | | — | | | (19,988) | | | (19,988) | |
| Balance as of March 31, 2022 | | 117,927 | | | 12 | | | 657,781 | | | — | | | (490,897) | | | 166,896 | |
| Stock-based compensation | | — | | | — | | | 3,365 | | | — | | | — | | | 3,365 | |
| Issuance of common stock upon exercise of stock options | | 180 | | | — | | | 8 | | | — | | | — | | | 8 | |
| Issuance of common stock upon vesting of restricted stock awards | | 27 | | | — | | | — | | | — | | | — | | | — | |
| Issuance of common stock upon vesting of restricted stock units | | 520 | | | — | | | — | | | — | | | — | | | — | |
| Withholding of stock units to satisfy tax withholding obligations upon the vesting of restricted stock units and exercise of stock options | | (201) | | | — | | | (444) | | | — | | | — | | | (444) | |
| Net loss | | — | | | — | | | — | | | — | | | (26,278) | | | (26,278) | |
| Balance as of June 30, 2022 | | 118,453 | | | $ | 12 | | | $ | 660,710 | | | $ | — | | | $ | (517,175) | | | $ | 143,547 | |
| | | | | | | | | | | | |
| | Common Stock | | Additional Paid-In | | Other Comprehensive Income | | Accumulated | | Total Stockholders' |
| | Shares | | Amount | | Capital | | (Loss) | | Deficit | | Deficit |
| Balance as of January 1, 2021, as adjusted | | 34,692 | | | $ | 3 | | | $ | 191,168 | | | $ | — | | | $ | (223,984) | | | $ | (32,813) | |
| Stock-based compensation | | — | | | — | | | 508 | | | — | | | — | | | 508 | |
| Issuance of common stock due to Bridge Notes | | 20,029 | | | 2 | | | 103,722 | | | — | | | — | | | 103,724 | |
| Issuance of common stock upon exercise of stock options | | 468 | | | — | | | 1 | | | — | | | — | | | 1 | |
| Issuance of common stock upon vesting of restricted stock awards | | 171 | | | — | | | — | | | — | | | — | | | — | |
| Issuance of common stock upon exercise of warrants | | 1,095 | | | — | | | 120 | | | — | | | — | | | 120 | |
| Other comprehensive income | | — | | | — | | | — | | | 1,389 | | | — | | | 1,389 | |
| Net loss | | — | | | — | | | — | | | — | | | (168,556) | | | (168,556) | |
| Balance as of March 31, 2021 | | 56,455 | | | 5 | | | 295,519 | | | 1,389 | | | (392,540) | | | (95,627) | |
| Stock-based compensation | | — | | | — | | | 264 | | | — | | | — | | | 264 | |
| Issuance of common stock due to Bridge Notes Rights Offering | | 314 | | | — | | | 2,629 | | | — | | | — | | | 2,629 | |
| Issuance of common stock upon exercise of stock options | | 210 | | | — | | | 6 | | | — | | | — | | | 6 | |
| Issuance of common stock upon vesting of restricted stock awards | | 130 | | | — | | | — | | | — | | | — | | | — | |
| Issuance of common stock upon vesting of restricted stock units | | 34 | | | — | | | — | | | — | | | — | | | — | |
| Other comprehensive loss | | — | | | — | | | — | | | (1,930) | | | — | | | (1,930) | |
| Net loss | | — | | | — | | | — | | | — | | | (35,585) | | | (35,585) | |
| Balance as of June 30, 2021 | | 57,143 | | | $ | 5 | | | $ | 298,418 | | | $ | (541) | | | $ | (428,125) | | | $ | (130,243) | |
\See notes to unaudited condensed consolidated financial statements
BLACKSKY TECHNOLOGY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
| | | | | | | | | | | |
| Six Months Ended June 30, |
| 2022 | | 2021 |
| Cash flows from operating activities: | | | |
| Net loss | $ | (46,266) | | | $ | (204,141) | |
| Loss from discontinued operations, net of income taxes | — | | | (1,022) | |
| Loss from continuing operations | (46,266) | | | (203,119) | |
| Adjustments to reconcile net loss to net cash used in operating activities: | | | |
| Depreciation and amortization expense | 16,568 | | | 6,301 | |
| | | |
| Bad debt expense | (1) | | | 4 | |
| Stock-based compensation expense | 13,226 | | | 772 | |
| Loss on issuance of 2021 convertible Bridge Notes | — | | | 96,476 | |
| Loss on issuance of 2021 convertible Bridge Notes Rights Offering | — | | | 3,193 | |
| Issuance costs for derivative liabilities and debt carried at fair value | — | | | 47,718 | |
| Amortization of debt discount and issuance costs | 1,018 | | | 823 | |
| Gain on equity method investment | (1,470) | | | (963) | |
| Loss on disposal of property and equipment | — | | | 24 | |
| (Gain) loss on derivatives | (3,494) | | | 14,975 | |
| Satellite impairment loss | — | | | 18,407 | |
| Other, net | 16 | | | — | |
| Changes in operating assets and liabilities: | | | |
| Accounts receivable | (787) | | | (1,293) | |
| Contract assets | (3,824) | | | 1,151 | |
| Prepaid expenses and other current assets | 1,914 | | | (405) | |
| Other assets | (30) | | | (150) | |
| Accounts payable and accrued liabilities | 389 | | | (2,604) | |
| Other current liabilities | 16 | | | (2,067) | |
| Contract liabilities - current and long-term | (6,903) | | | (952) | |
| Liability for estimated contract losses | (2,670) | | | (1,047) | |
| Other liabilities | 4,509 | | | 1,644 | |
| Net cash used in operating activities | (27,789) | | | (21,112) | |
| Cash flows from investing activities: | | | |
| Purchase of property and equipment | (5,289) | | | (207) | |
| Satellite procurement work in process | (20,208) | | | (11,205) | |
| Purchase of short-term investments | (43,774) | | | — | |
| Purchase of domain name | — | | | (7) | |
| Proceeds from equity method investment | 313 | | | — | |
| Net cash used in investing activities | (68,958) | | | (11,419) | |
| Cash flows from financing activities: | | | |
| | | |
| | | |
| Proceeds from issuance of debt | — | | | 58,573 | |
| Proceeds from options exercised | 25 | | | 7 | |
| Proceeds from warrants exercised | — | | | 120 | |
| | | |
| Debt payments | — | | | (750) | |
| Payments for deferred offering costs | — | | | (3,487) | |
| Payments for debt issuance costs | — | | | (646) | |
| Withholding tax payments on vesting of restricted stock units | (4,037) | | | — | |
| Net cash (used in) provided by financing activities | (4,012) | | | 53,817 | |
| Net (decrease) increase in cash, cash equivalents, and restricted cash | (100,759) | | | 21,286 | |
| Cash, cash equivalents, and restricted cash – beginning of year | 168,104 | | | 10,573 | |
| Cash, cash equivalents, and restricted cash – end of period | $ | 67,345 | | | $ | 31,859 | |
See notes to unaudited condensed consolidated financial statements
The following table provides a reconciliation of cash, cash equivalents, and restricted from redeemingcash reported within the unaudited condensed consolidated balance sheets that sum to the total of the same such amounts shown in the unaudited condensed consolidated statements of cash flows:
| | | | | | | | | | | |
| June 30, |
| 2022 | | 2021 |
| |
| Cash and cash equivalents | $ | 64,827 | | | $ | 26,384 | |
| Restricted cash | 2,518 | | | 5,475 | |
| Total cash, cash equivalents, and restricted cash | $ | 67,345 | | | $ | 31,859 | |
| | | | | | | | | | | |
| June 30, |
| 2022 | | 2021 |
| (in thousands) |
| Supplemental disclosures of cash flow information: | | | |
| Cash paid for interest | $ | 2 | | | $ | 286 | |
| Supplemental disclosures of non-cash financing and investing information: | | | |
| Property and equipment additions accrued but not paid | $ | 3,798 | | | $ | 10,837 | |
| Capitalized stock-based compensation | 1,001 | | | — | |
| Capitalized interest for property and equipment placed into service | 220 | | | 135 | |
| Accretion of short-term investments' discounts and premiums | 59 | | | — | |
| Withholding of stock units to satisfy tax withholding obligations upon the exercise of stock options | 23 | | | — | |
| SPAC costs accrued but not paid | — | | | 3,663 | |
| Debt issuance costs expensed for debt carried at fair value accrued but not paid | — | | | 3,129 | |
| Issuance of common stock due to Bridge Notes, net of issuance costs | — | | | 106,353 | |
| Issuance of common stock warrants due to Bridge Notes | — | | | 18,800 | |
| Consent fees payable in common stock or cash recorded as a derivative | — | | | 2,715 | |
| | | |
| | | |
| | | |
| | | |
| | | |
| Contingent liability for working capital adjustment and use taxes to M&Y Space Co. Ltd | — | | | 1,022 | |
| | | |
| | | |
See notes to unaudited condensed consolidated financial statements
BLACKSKY TECHNOLOGY INC.
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
June 30, 2022
1. Organization and Business
On September 9, 2021, Osprey Technology Acquisition Corp. (“Osprey”) consummated the previously announced merger (the “Merger”) with BlackSky Holdings, Inc. (f/k/a Spaceflight Industries, Inc.), a Delaware corporation (“Legacy BlackSky”), pursuant to the agreement and plan of merger, dated February 17, 2021, by and among Osprey, Osprey Technology Merger Sub, Inc., a direct, wholly owned subsidiary of Osprey, and Legacy BlackSky. Immediately following the Merger, Osprey changed its shares with respectname to moreBlackSky Technology Inc. (“BlackSky” or the “Company”). Legacy BlackSky survived the Merger and is now a wholly owned subsidiary of BlackSky. As a special purpose acquisition corporation, Osprey had no pre-Merger operations other than an aggregateto identify and consummate a merger. Therefore, BlackSky’s operations post-Merger are attributable to those of 15%Legacy BlackSky and its subsidiaries, and references to “BlackSky” or the “Company” should be read to include BlackSky’s wholly owned subsidiaries. References in this report to Company actions, assets/liabilities, or contracts may be references to actions taken, assets/liabilities held, or contracts entered into by one or more current Company subsidiaries; however, the Company has distinguished between actions taken by Legacy BlackSky or Osprey for certain time based, historical transactions.
BlackSky, headquartered in Herndon, Virginia, is a leading provider of real-time geospatial intelligence. The Company owns and operates one of the
Public Shares, without the prior consentindustry's leading high-performance low earth orbit small satellite constellations. Our constellation is optimized to cost-efficiently capture imagery at high revisit rates where and when our customers need it. BlackSky’s Spectra AI software platform processes millions of
the Company.The Sponsorobservations a day from our proprietary satellite constellation and the Company’s officersfrom multiple external data sources including imaging, radar and directors have agreed (a)radio frequency satellites, environmental sensors, asset tracking sensors, Internet of Things (“IoT”) connected devices, internet-enabled narrative sources, and a variety of geotemporal data feeds. Spectra AI employs advanced, proprietary artificial intelligence ("AI") and machine learning (“ML”) techniques to waive their redemption rights with respect to their Founder Sharesprocess, analyze, and Public Shares held by themtransform these data feeds into alerts, information, and insights. Customers can access Spectra AI’s data and analytics through easy-to-use web services or through platform application programming interfaces.
As of June 30, 2022, BlackSky had 14 satellites in
connection with the completion of a Business Combinationcommercial operation. BlackSky has 2 primary operating subsidiaries, BlackSky Global LLC and
(b) not to propose an amendment to the Company’s Amended and Restated Certificate of Incorporation (a) that would modify the substance or timing of the Company’s obligation to allow redemption in connection with a Business Combination or to redeem 100% of its Public Shares if the Company does not complete a Business Combination or (b) with respect to any other provision relating to stockholders’ rights orpre-initial Business Combination activity, unless the Company provides the public stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment.BlackSky Geospatial Solutions, Inc. The Company will have until November 5, 2021 to consummatealso owns 50 percent of LeoStella LLC (“LeoStella”), its joint venture with Thales Alenia Space US Investment LLC (“Thales”). LeoStella is a Business Combination (the “Combination Period”). If the Company is unable to complete a Business Combination within the Combination Period, the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at aper-share price, payablevertically-integrated small satellite design and manufacturer based in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to the Company to pay franchise and income taxes (less up to $100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish the public stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), subject to applicable law, and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period.
OSPREY TECHNOLOGY ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2019
(Unaudited)
The Sponsor has agreed to waive its liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the Sponsor or any of the Company’s officers, directors or any of their affiliates acquires Public Shares in or after the Initial Public Offering, they will be entitled to liquidating distributionsTukwila, Washington, from the Trust Account with respect to such Public Shares if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($10.00).
In order to protect the amounts held in the Trust Account, Mr. Jonathan Cohen, the Company’sCo-Chairman, has agreed to be liable to the Company if and to the extent any claims by a vendor for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a definitive agreement, reduce the amount of funds in the Trust Accountprocures satellites to below (i) $10.00 per share or (ii) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account due to reductions in the value of the trust assets. This liability will not apply with respect to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account or to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, Mr. Jonathan Cohen will not be responsible to the extent of any liability for such third-party claims.operate its business. The Company will seek to reduce the possibility that Mr. Jonathan Cohen will have to indemnify the Trust Account due to claimsaccounts for LeoStella and X-Bow Launch Systems Inc. (“X-Bow”), a space technology company specializing in additive manufacturing of creditors by endeavoring to have all vendors, service providers, prospective target businesses or other entities withsolid rocket motors of which the Company does business, execute agreements with the Company waiving any right, title, interest or claimBlackSky owns approximately 15.1%, as equity method investments (Note 6).
2. Basis of
any kind in or to monies held in the Trust Account.Note 2—Presentation and Summary of Significant Accounting Policies
Basis of
PresentationPreparation
The accompanyingCompany has prepared its unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally acceptedGenerally Accepted Accounting Principles in the United States of America (“GAAP”) for interim financial information and in accordance with the instructions to Form10-Q 10-K and Article 8 of RegulationS-X of the SEC. Certain information or footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to the rulesSecurities and regulations of the SEC for interim financial reporting. Accordingly, they do not include all the information and footnotes necessary for a complete presentation of financial position, results of operations, or cash flows. In the opinion of management, theExchange Commission (the "SEC"). The accompanying unaudited condensed consolidated financial statements include all adjustments, consistingthe accounts of the Company and its wholly-owned subsidiaries. In addition, the unaudited condensed consolidated financial statements include the Company’s proportionate share of the earnings or losses of its equity method investments and a normal recurring nature,corresponding increase or decrease to its investment, with recorded losses limited to the carrying value of the Company’s investment. All intercompany transactions and balances have been eliminated upon consolidation.
The Company’s unaudited condensed consolidated financial statements have been prepared on a historical cost basis, except for certain financial assets and liabilities, including equity warrants and other equity
instruments classified as derivative liabilities, which are
necessary for astated at fair
presentation ofvalue. The Company also incurred debt, which was also stated at fair value and subsequently converted to equity in the
financial position, operating results and cash flows forMerger. Unless otherwise indicated, amounts presented in the
periods presented.The accompanyingNotes pertain to the Company’s continuing operations. These unaudited condensed consolidated financial statements should be read in conjunction with the Company’s prospectus for its Initial Public Offering asannual consolidated financial statements and notes included in the Company’s Form 10-K filed with the SEC on November 4, 2019, as well as the Company’s Current Reports on Form8-K, as filed with the SEC on November 12, 2019 and November 14, 2019. The interim resultsMarch 31, 2022. In management’s opinion, all adjustments of a normal recurring nature that are necessary for the nine months ended September 30, 2019 are not necessarily indicativea fair statement of the results to be expected for the year ended December 31, 2019 or for any future periods.
Emerging Growth Company
The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved.
OSPREY TECHNOLOGY ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2019
(Unaudited)
Further, section 102(b)(1) of 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 a company can elect to opt out of the extended transition period and comply with the requirements that apply tonon-emerging growth companies, but any such 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. This may make comparison of the Company’saccompanying unaudited condensed consolidated financial statements with another public company, which is neither an emerging growth company nor an emerging growth company, and which has opted out of using the extended transition period, difficult or impossible because of the potential differences in accounting standards used.
have been included.
The preparation of the
unaudited condensed consolidated financial statements
in conformity with GAAP requires
the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities,
andthe disclosure of
contingent assets and liabilitiescontingencies at the
reporting date,
of the financial statements and the reported amounts of
revenuesrevenue and expenses during the reporting period.
Making These estimates requires managementare based on management’s best knowledge of current events and actions the Company may undertake in the future. Actual results could materially differ from these estimates. Significant estimates made by the Company include, but are not limited to, exercise significant judgment. Itrevenue and associated cost recognition, the collectability of accounts receivable, the recoverability and useful lives of property and equipment, the valuation of equity warrants and warrant liabilities, fair value estimates, the recoverability of goodwill and intangible assets, the provision for income taxes, and stock-based compensation.
Investments
The Company’s investments generally consist of A-1, or higher, rated corporate debt and governmental securities as short-term investments. Our investments are classified as held-to-maturity and have a stated maturity date of one year or less from the balance sheet date. Any investments with original maturities less than three months are considered as cash equivalents.
Property and Equipment - net
The Company capitalizes internal and external costs incurred to develop and implement internal-use software, which consist primarily of costs related to design, coding, and testing. Internal costs include salaries and allocations of fringe and stock-based compensation. When the software is at least reasonably possible thatready for its intended use, capitalization ceases and such costs are amortized on a straight-line basis over the estimateestimated life to either depreciation or cost of sales depending on the nature of the effectsoftware. Costs incurred prior to and after the application development stage are charged to development costs as part of selling, general, and administrative expense in the unaudited condensed consolidated statements of operations and comprehensive loss. The Company regularly reviews its capitalized software projects for impairment.
Fair Value of Financial Instruments
The Company accounts for certain assets and liabilities at fair value. Fair value is defined as the price that would be received to sell an asset or paid to transfer a condition, situation or set of circumstances that existedliability in an orderly transaction between market participants at the datemeasurement date.
The process for analyzing the fair value measurement of certain financial instruments on a recurring, or non-recurring, basis includes significant judgment and estimates of inputs including, but not limited to, share price, volatility, discount for lack of marketability, application of an appropriate discount rate, and probability of liquidating events. The Company utilizes the market valuation methodology and specific option pricing methodology, such as the Monte Carlo simulation, method to value the more complex financial instruments and the Black-Scholes option-pricing model to value standard common stock warrants and common stock options.
The framework for measuring fair value specifies a hierarchy of valuation techniques based on whether the inputs to those valuation techniques are observable or unobservable. Observable inputs reflect market data obtained from independent sources, while unobservable inputs reflect the Company's assumptions. The
hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurement) and the lowest priority to unobservable inputs (Level 3 measurement).
The three levels of the financial statements,fair value hierarchy are as follows:
Level 1 Inputs. Inputs are unadjusted quoted prices in active markets for identical assets or liabilities available at the measurement date.
Level 2 Inputs. Inputs are unadjusted quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, inputs other than quoted prices that are observable, and inputs derived from or corroborated by observable market data.
Level 3 Inputs. Inputs are unobservable inputs which management consideredreflect the Company’s own assumptions on what assumptions market participants would use in formulating its estimate, could change inpricing the near term due to oneasset or more future confirming events. Accordingly,liability based on the actual results could differ significantly from those estimates.Cash and cash equivalents
best available information.
Revenue Recognition
The Company considers all short-term investmentsgenerates revenue from the sale of imagery and software analytical services and engineering and systems integration. Imagery and software analytical services revenue includes imagery, data, software, and analytics, including professional services. This revenue is recognized from services rendered under cost-plus-fixed-fee contracts, firm fixed price contracts, a time and materials basis or non-cancellable subscription order agreements. Engineering and systems integration revenue is from fixed price long-term construction contracts.
The Company generates revenue primarily through contracts with an original maturitygovernment agencies. Most of three monthsthe fixed price contracts include multiple promises, which are generally separated as distinct performance obligations. The Company allocates the transaction price to each performance obligation based on the relative standalone selling prices using observable sales transactions where applicable.
In accordance with Accounting Standards Update No. 2014-09, “Revenue from Contracts with Customers (Topic 606)”(“ASC 606”), the Company uses the five-step model of identifying the performance obligations contained in a contract, determining transaction price, allocating transaction price, and determining when performance obligations are satisfied can require the application of significant judgment, as further discussed below.
Revenue is measured at the fair value of consideration received or lessreceivable and net of discounts. The Company applies a policy election to exclude transaction taxes collected from customer sales when purchased to be cash equivalents.the tax is both imposed on and concurrent with a specific revenue-producing transaction. The Company estimates any variable consideration, and whether the transaction price is constrained, upon execution of each contract. The Company did not have any cash equivalentsactive contracts with significant variable consideration as of SeptemberJune 30, 20192022.
Imagery & Software Analytical Services Revenue
Imagery
Imagery services include imagery delivered from the Company’s satellites in orbit via its Spectra AI platform and
December 31, 2018.Deferred offering costs
Offering costs consistin limited cases directly uploaded to certain customers. Customers can directly task our proprietary satellite constellation to collect and deliver imagery over specific locations, sites and regions that are critical to their operations. We offer customers several service level options that include basic plans for on-demand tasking or multi-year assured access programs, where customers can secure priority access and imaging capacity at a premium over a region of legal, accounting, underwriting feesinterest on a take or pay basis. Imagery performance obligations are recognized ratably over the fixed price subscription period for the right to access imagery or as revenue at the point-in-time when the Company delivers images to the Spectra AI platform.
Data, Software, and Analytics
The Company leverages proprietary AI and ML algorithms to analyze data coming from both the Company’s proprietary sensor network and third-party space and terrestrial sources to provide hard-to-get data,
insights, and analytics for customers. The Company continues to integrate and enhance its offerings by performing contract development, while retaining the intellectual property rights. The Company also provides technology enabled professional service solutions to support customer-specific software development requests, integration, testing, and training. The Company uses system engineers to support customer efforts to manage mass quantities of data. The Company also offers professional service solutions related to object, change and anomaly detection, site monitoring, and enhanced analytics, through which the Company can detect key pattern of life changes in critical locations such as ports, airports, and construction sites; retail activity; commodities stockpiles; and other sites that contain critical commodities and supply chain information.
Our analytics services are also offered on a consumption or subscription basis and provide customers with access to our site monitoring, event monitoring and global data services. Imagery and software analytical services revenue from data, software, and analytics contracts is recognized from the rendering of services over time on a cost-plus-fixed-fee, firm fixed price, or time and materials basis as well as, at the point-in-time the customer receives access to an analytic product. For firm fixed price professional service contracts, the Company recognizes revenue using total estimated costs to complete the performance obligation, ("Estimate at Completion" or "EAC"). A performance obligation’s EAC includes all direct costs such as labor, materials, subcontract costs and overhead. In addition, an EAC of a performance obligation includes future losses estimated to be incurred on contracts, as and when known. For contracts structured as cost-plus-fixed-fee or on a time and materials basis, the Company generally recognizes revenue based on the right-to-invoice when practically expedient, as the Company is contractually able to invoice the customer based on the control transferred to the customer in an amount that corresponds directly with the value to the customer of the entity’s performance completed to date.
Engineering and Systems Integration Revenue
The Company develops and delivers advanced launch vehicle, satellite and payload systems for a limited number of customers that leverage the Company’s capabilities in mission systems engineering and operations, ground station operations, and software and systems development. These systems are sold to government customers under fixed price contracts. The Company generally recognizes revenue over time using the cost-to-cost method to measure progress, pursuant to which the extent of progress towards completion is measured based on the ratio of costs incurred throughto date to the EAC. The estimation of total estimated costs at completion is subject to many variables and requires judgment. The Company recognizes changes in contract estimates on a cumulative catch-up basis in the period in which the changes are identified. Such changes in contract estimates can result in the recognition of revenue in a current period for performance obligations which were satisfied or partially satisfied in a prior period. If at any time, the estimate of profitability for a performance obligation indicates a probable anticipated loss, the Company recognizes the total loss for the performance obligation in the period it is identified. Changes in estimates related to contracts accounted for using the cost-to-cost measure of progress are recognized in the period in which such changes are made for the inception-to-date effect of the changes. For the three and six months ended June 30, 2022, the Company recognized $1.4 million and $2.2 million, respectively, of unfavorable cumulative adjustments to revenue directly from estimated cost increases on 2 engineering and systems integration contracts (Note 5). All, or a portion, of this cumulative adjustment will be recognized in future revenue as the percentage of completion increases over time. During the three and six months ended June 30, 2021, the Company recognized a $0.3 million favorable impact to revenue attributable to changes in other contract estimates. During the three and six months ended June 30, 2022, there was no revenue recognized from performance obligations satisfied in previous periods.
Imagery and Software Analytical Service and Engineering and Systems Integration Costs
Imagery and software analytical service costs primarily include internal aerospace and geospatial software development labor, third-party data and imagery, internal labor to support the ground stations and space operations, and cloud computing and hosting services. The Company recognizes stock-based compensation expense for those employees whose work supports the imagery and software analytical service costs we provide to customers, under imagery and software analytical service costs, excluding depreciation and amortization. For those employees who provide engineering and systems support to customers, the stock-based compensation expense is classified under engineering and systems integration costs. For the remaining employees who
generally support the Company and its business, the stock-based compensation expense is recognized under selling, general and administrative expense in the unaudited condensed consolidated statements of operations and comprehensive loss.
Engineering and systems integration costs primarily include the cost of internal labor for product design, integration and engineering in support of long-term development contracts for launch vehicle, satellite and payload systems. The Company also incurs subcontract direct materials and external labor costs to build and test specific components such as the communications system, payload demands and sensor integration.
Stock-Based Compensation
Restricted Stock Awards and Restricted Stock Units
The estimated fair value of RSAs and RSUs are measured based on the grant date fair value of the Company’s Class A common stock. In order to determine the fair value of its Class A common stock on the date of grant and prior to the Merger, Legacy BlackSky historically performed a valuation analysis using a combination of market and income approaches. Subsequent to the Merger, the Company uses the New York Stock Exchange (“NYSE”) trading price as the fair value of the Class A common stock for valuation purposes. For all awards for which vesting is only subject to a service condition, including those subject to graded vesting, the Company has elected to use the straight-line method to recognize the fair value as compensation cost over the requisite service period.
Certain of the Company’s outstanding RSUs had performance vesting conditions that were triggered upon the consummation of the Merger. Therefore, since the performance conditions attributable to these RSUs had been met, the Company commenced recording the associated compensation expense, inclusive of a catch-up amount for the service period between their grant date and satisfaction of the performance condition, as of the closing of the Merger. The fair value of the RSUs that include a performance condition is recognized as compensation expense over the requisite service period using the accelerated attribution method, which accounts for RSUs with discrete vesting dates as if they were a separate award. Expense related to stock-based payments is classified in the unaudited condensed consolidated statements of operations and comprehensive loss based upon the classification of each employees’ cash compensation.
Stock Options
The Company uses the Black-Scholes option pricing model to value all options and the straight-line method to recognize the fair value as compensation cost over the requisite service period. The fair value of each option granted was estimated as of the date of grant. The Company granted options in the three and six months ended June 30, 2022. The Company uses the following inputs when applying the Black-Scholes option pricing model:
Expected Dividend Yield. The Black-Scholes valuation model requires an expected dividend yield as an input. The dividend yield is based on historical experience and expected future changes. The Company currently has no plans to pay dividends on its Class A common stock.
Expected Volatility. The Company does not have enough historical share price history, therefore, the expected volatility was estimated based upon the historical share price volatility of comparable publicly traded companies.
Risk-free Interest Rate. The yield on actively traded non-inflation indexed U.S. Treasury notes was used to extrapolate an average risk-free interest rate based on the expected term of the underlying grants.
Expected Term. For options granted in 2021 and 2022, since there is not a history of option exercises as a public company, the Company considered the option vesting terms and contractual period, as well as the demographics of the holders, in estimating the expected term. For options granted prior to 2021, the expected term was the estimated duration to a liquidation event based on a weighted average consideration of the most likely exit prospects for that stage of development. Legacy BlackSky was privately funded and, accordingly, the lack of marketability was factored into the expected term of options granted. The Company will review its estimate in the future and adjust it, if necessary, due to changes in the Company’s historical exercises.
The most significant assumption used to determine the fair value of the Legacy BlackSky equity-based awards was the estimated fair value of the Class A common stock on the grant date. In order to determine the fair value of its Class A common stock on the date of grant and prior to the Merger, Legacy BlackSky historically performed a valuation analysis using a combination of market and income approaches. Subsequent to the Merger, the Company uses the NYSE trading price as the fair value of the Class A common stock for valuation purposes.
Legacy BlackSky historically adjusted the exercise price of certain outstanding stock options. For each award with an adjusted exercise price, Legacy BlackSky calculated the incremental fair value, which was the excess of the fair value of the modified award over the fair value of the original award immediately before the modification. The incremental fair value was recognized as stock-based compensation expense immediately to the extent that the modified stock option already had vested, and for stock options that were not yet vested, the incremental fair value has been recognized as stock-based compensation expense over the remaining vesting period.
3. Accounting Standards Updates (“ASU”)
Accounting Standards Recently Adopted
In May 2021, the FASB issued ASU 2021-04, “Earnings per Share (Topic 260), Debt-Modifications and Extinguishments (Subtopic 470-50), Compensation-Stock Compensation (Topic 718), and Derivatives and Hedging-Contracts in Entity’s Own Equity (Subtopic 815-40)”, which clarifies and reduces diversity in an issuer’s accounting for modifications or exchanges of freestanding equity-classified written call options (for example, warrants) that remain equity classified upon modification or exchange. This ASU is effective for all entities for fiscal years beginning after December 15, 2021, including interim periods within those fiscal years. An entity should apply the amendments prospectively to modifications or exchanges occurring on or after the effective date of the amendments. Early adoption is permitted for all entities, including adoption in an interim period. The Company adopted this guidance as of January 1, 2022 and this guidance is not expected to impact the Company unless it modifies or exchanges freestanding financial instruments within the scope of the guidance subsequent to adoption.
Accounting Standards Recently Issued But Not Yet Adopted
In February 2016, the FASB issued ASU 2016-02“Leases”. Theamendments in this update require the recognition of lease assets and lease liabilities on the balance sheet, date that are directly related toas well as certain qualitative disclosures regarding leasing arrangements. The guidance requires the Initial Public Offering. Offering costs amounting to $18,047,876 were charged to stockholders’ equity upon the completionuse of the Initial Public Offering.Income Taxes
modified retrospective method, with the cumulative effect of initially applying these updates recognized at the date of initial application. The guidance was effective for public business entities for annual periods, including interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. For all other entities, the guidance is effective for fiscal years beginning after December 15, 2021, and for interim periods beginning after December 15, 2022, with early adoption permitted. As of June 30, 2022, the Company followsholds emerging growth company status, as such it is permitted to present the asset and liability methodimpact of accounting for income taxes under ASC 740, “Income Taxes.” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financialnew guidance in its annual statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.
ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of September 30, 2019.December 31, 2022 and interim statements thereafter. The Company is currently in the process of evaluating the adoption impact but expects the adoption of the standard to have a material impact to the unaudited condensed consolidated balance sheets, since the Company will be required to report operating leases in the unaudited condensed consolidated balance sheets for the first time. The Company is in the process of its adoption efforts and cannot yet reasonably estimate the impact to the consolidated financial statements.
In June 2016, the FASB issued ASU No. 2016-13,“Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments”. The amendments in this update are primarily for entities holding financial assets and net investment leases measured under an incurred loss impairment methodology. A new methodology must be adopted to reflect expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates, which would include losses on trade accounts receivable. This ASU requires modified retrospective application. The guidance is effective for public business entities that are not smaller reporting companies for fiscal years beginning after December 15, 2019, including interim periods therein. For all other entities, the guidance is
effective for fiscal years beginning after December 15, 2022, including interim periods therein. The Company is currently in the planning stage and, as a emerging growth status company, will adopt the guidance on January 1, 2023. The Company has not yet determined the potential impact, if any, that this guidance will have on its consolidated financial statements.
In December 2019, the FASB issued ASU No. 2019-12, Income Taxes (Topic 740): “Simplifying the Accounting for Income Taxes”. The amendments in this update are intended to simplify various aspects related to accounting for income taxes. This ASU removes certain exceptions to the general principles in Topic 740 and also clarifies and amends existing guidance to improve consistent application. This ASU can be applied on a retrospective, modified retrospective or prospective basis. The guidance is effective for all public business entities for fiscal years beginning after December 15, 2020, including interim periods therein. For all other entities, the guidance is effective for fiscal years beginning after December 15, 2021, and for interim periods beginning after December 15, 2022. Early adoption is also permitted. As of June 30, 2022, the Company holds emerging growth company status, as such it is permitted to present the impact of the new guidance in its annual statement as of December 31, 2022 and interim statements thereafter. The Company is currently in the process of evaluating the adoption impact and has not yet determined the potential impact, if any, that this guidance will have on its consolidated financial statements.
4. Revenue
Disaggregation of Revenue
The Company earns revenue through the sale of imagery and software analytical services and engineering and systems integration. The Company’s management primarily disaggregates revenue as follows: (i) imagery; (ii) data, software and analytics; and (iii) engineering and integration. This disaggregation allows the Company to evaluate market trends in certain imagery and software analytical services and engineering and systems integration services. These offerings currently have both recurring and non-recurring price attributes, particularly the engineering and systems integration offerings.
The following table disaggregates revenue by type of imagery and software analytical services and engineering and integration for the three and six months ended June 30, 2022 and 2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2022 | | 2021 | | 2022 | | 2021 |
| | (in thousands) |
| Imagery | | $ | 6,833 | | | $ | 1,384 | | | $ | 10,443 | | | $ | 2,848 | |
| Data, software and analytics | | 6,517 | | | 3,733 | | | 12,679 | | | 8,267 | |
| Engineering & integration | | 1,752 | | | 2,248 | | | 5,876 | | | 3,544 | |
| Total revenue | | $ | 15,102 | | | $ | 7,365 | | | $ | 28,998 | | | $ | 14,659 | |
The approximate revenue based on geographic location of customers is as follows for the three and six months ended June 30, 2022 and 2021:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2022 | | 2021 | | 2022 | | 2021 |
| | (in thousands) |
| US | | $ | 12,437 | | | $ | 6,236 | | | $ | 23,584 | | | $ | 12,359 | |
| Middle East | | 782 | | | 694 | | | 1,376 | | | 1,380 | |
| Asia | | 1,584 | | | 312 | | | 3,578 | | | 770 | |
| Other | | 299 | | | 123 | | | 460 | | | 150 | |
| Total revenue | | $ | 15,102 | | | $ | 7,365 | | | $ | 28,998 | | | $ | 14,659 | |
Revenue from significant customers for the three and six months ended June 30, 2022 and 2021 is as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2022 | | 2021 | | 2022 | | 2021 |
| | (in thousands) |
| U.S. federal government and agencies | | $ | 12,162 | | | $ | 6,188 | | | $ | 23,225 | | | $ | 12,307 | |
| International government | | 2,742 | | | 1,177 | | | 5,487 | | | 2,352 | |
| Commercial and other | | 198 | | | — | | | 286 | | | — | |
| Total revenue | | $ | 15,102 | | | $ | 7,365 | | | $ | 28,998 | | | $ | 14,659 | |
As of June 30, 2022 and December 31, 2021, accounts receivable consisted of the following:
| | | | | | | | | | | |
| June 30, | | December 31, |
| 2022 | | 2021 |
| (in thousands) |
| U.S. federal government and agencies | $ | 3,041 | | | $ | 2,576 | |
| International government | 341 | | | 76 | |
| Commercial and other | 35 | | | 16 | |
| Allowance for doubtful accounts | — | | | (39) | |
| Total accounts receivable | $ | 3,417 | | | $ | 2,629 | |
Backlog
Backlog represents the future sales we expect to recognize on firm orders received by the Company and is equivalent to the Company’s remaining performance obligations at the end of each period. It comprises both funded backlog (firm orders for which funding is authorized and appropriated) and unfunded backlog. The Company's Backlog excludes unexercised contract options. As of June 30, 2022, the Company had $108.0 million of backlog, which represents the transaction price of executed contracts less inception to date revenue recognized. The Company expects to recognize revenue relating to our backlog, of which a portion is recorded in deferred revenue in the unaudited condensed consolidated balance sheets, of $30.8 million, $45.6 million, and $31.6 million in the six months ending December 31, 2022, fiscal year 2023, and thereafter, respectively.
5. Contract Assets and Liabilities
The components of contract assets and contract liabilities consisted of the following:
| | | | | | | | | | | |
| June 30, | | December 31, |
| 2022 | | 2021 |
| (in thousands) |
| Contract assets - current | | | |
| Unbilled revenue | $ | 5,091 | | | $ | 788 | |
| Contract assets | 411 | | | 890 | |
| Total contract assets - current | $ | 5,502 | | | $ | 1,678 | |
| | | |
| Contract liabilities - current | | | |
| Deferred revenue - short-term | $ | 4,260 | | | $ | 11,082 | |
| Other contract liabilities | 671 | | | 184 | |
| Total contract liabilities - current | $ | 4,931 | | | $ | 11,266 | |
| | | |
| Contract liabilities - long-term | $ | — | | | $ | — | |
| Deferred revenue - long-term | — | | | 568 | |
| Total contract liabilities - long-term | $ | — | | | $ | 568 | |
Deferred revenue and other contract liabilities are reported as contract liabilities in the accompanying unaudited condensed consolidated balance sheets. Contract liabilities include payments received and billings made in advance of the satisfaction of performance obligations under the contract and are realized when the associated revenue is recognized under the contract. Contract assets include (i) unbilled revenue, which is the amount of revenue recognized in excess of the amount billed to customers, where the rights to payment are not just subject to the passage of time; and (ii) costs incurred to fulfill contract obligations. Other contract assets and other contract liabilities primarily relate to contract commissions on customer contracts.
Changes in short-term and long-term contract assets and contract liabilities for the six months ended June 30, 2022 were as follows:
| | | | | | | | | | | |
| Contract Assets | | Contract Liabilities |
| (in thousands) |
| Balance on January 1, 2022 | $ | 1,678 | | | $ | 11,834 | |
| Billings or revenue recognized that was included in the beginning balance | (788) | | | (9,153) | |
| Changes in contract assets or contract liabilities, net of reclassification to receivables | 5,091 | | | (756) | |
| Cumulative catch-up adjustment arising from changes in estimates to complete | — | | | 2,163 | |
| Cumulative catch-up adjustment arising from contract modification | — | | | 356 | |
| Changes in costs to fulfill and amortization of commission costs | (479) | | | — | |
| Changes in contract commission costs | — | | | 487 | |
| Balance on June 30, 2022 | $ | 5,502 | | | $ | 4,931 | |
6. Equity Method Investments
LeoStella
The Company accounts for its investment in LeoStella as an equity method investment. The Company did not make any additional capital investments in LeoStella during the three and six months ended June 30, 2022 or 2021. During the six months ended June 30, 2022 and 2021, the Company remitted $17.1 million and
$11.2 million, respectively, of payments to LeoStella for satellite manufacturing and satellite software development.
X-Bow
In 2017, the Company entered into a stock subscription and technology transfer agreement with X-Bow, whereby the Company assigned and transferred certain intellectual property rights owned by the Company to X-Bow in exchange for 13.5 million shares of X-Bow, a strategic investment in a space technology company specializing in additive manufacturing of solid rocket motors. As of June 30, 2022, the Company's interest in X-Bow was 15.1%.
The following tables present summarized financial information for the Company’s equity method investments as of June 30, 2022 and December 31, 2021 and for the three and six months ended June 30, 2022 and 2021.
| | | | | | | | | | | | | | |
| | June 30, | | December 31, |
| Summarized balance sheets | | 2022 | | 2021 |
| | (in thousands) |
| Current assets | | $ | 64,252 | | | $ | 60,652 | |
| Non-current assets | | 7,280 | | | 5,798 | |
| Total assets | | $ | 71,532 | | | $ | 66,450 | |
| | | | |
| Current liabilities | | $ | 29,373 | | | $ | 39,612 | |
| Noncurrent liabilities | | 475 | | | 706 | |
| Total liabilities | | $ | 29,848 | | | $ | 40,318 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| Summarized statements of operations | | 2022 | | 2021 | | 2022 | | 2021 |
| | (in thousands) |
| Revenue | | $ | 14,526 | | | $ | 14,355 | | | $ | 31,259 | | | $ | 20,739 | |
| Net income | | 965 | | | 1,492 | | | 1,066 | | | 2,160 | |
Current assets of the Company’s equity method investees primarily consisted of inventories of $8.4 million and $17.0 million as of June 30, 2022 and December 31, 2021, respectively. Total liabilities of the Company’s equity method investees primarily consisted of customer advances of $24.8 million and $35.2 million as of June 30, 2022 and December 31, 2021, respectively.
The revenue related to equity method investments attributable to related parties was $14.5 million and $22.6 million for the three and six months ended June 30, 2022, respectively. The revenue related to equity method investments attributable to related parties was $8.4 million and $14.8 million for the three and six months ended June 30, 2021, respectively. The Company had differences between the carrying value of its equity method investments and the underlying equity in the net assets of the investees of $3.2 million as of June 30, 2022 and $2.9 million as of December 31, 2021. The difference is the result of the elimination of upstream intra-entity profits from the sale of satellites.
7. Discontinued Operations
On June 12, 2020, the Company completed the sale of 100% of its equity interests in Spaceflight to M&Y Space. Under a transition services agreement, the Company provides, post-closing transition services to Spaceflight, including, but not limited to, the sublease of the Company’s office facility in Seattle, Washington and common area maintenance fees related to the sublease.
Settlement Arrangement for the Sale of the Spaceflight
On March 30, 2021, the Company settled certain disputes with respect to the purchase price in the total amount of $6.8 million, which was accrued as a liability as of December 31, 2020. The Company paid the settlement amount in 2 tranches—(i) $2.0 million on April 1, 2021 and (ii) the remaining $4.8 million was triggered at the closing of the Merger. In April 2021, the Company also terminated a launch arrangement with Spaceflight and, as agreed upon by the parties, offset the amount due to M&Y Space with a contractual refund of $3.9 million of which the net amount of $819 thousand was settled for cash in September 2021. As a result, the Company recorded a reduction to the accrued liability and a reduction to satellite procurement in the unaudited condensed consolidated balance sheet as of December 31, 2021.
The following summarizes the components of the loss from discontinued operations, net of income taxes, that the Company has reported in the unaudited condensed consolidated statements of operations and comprehensive loss. The Company recognized an unfavorable working capital adjustment of $1.0 million during the three and six months ended June 30, 2021 primarily related to a potential shortfall in accounts receivable in the closing balance sheet delivered to M&Y Space.
| | | | | | | | | | | |
| Three and six months ended June 30, |
| 2022 | | 2021 |
| (in thousands) |
| Major classes of line items constituting loss from discontinued operations: | | | |
| Revenue - launch services | $ | — | | | $ | — | |
| Total operating costs and expenses | — | | | — | |
| Operating loss | — | | | — | |
| Loss from discontinued operations, before income taxes | — | | | — | |
| Loss on disposal of discontinued operations | — | | | (1,022) | |
| Total loss from discontinued operations, net of income taxes | — | | | (1,022) | |
8. Property and Equipment - net
The following summarizes property and equipment - net as of:
| | | | | | | | | | | |
| June 30, | | December 31, |
| 2022 | | 2021 |
| (in thousands) |
| Satellites | $ | 116,210 | | | $ | 93,709 | |
| Software | 3,718 | | — |
| Software development in process | 2,595 | | — |
| Computer equipment | 1,864 | | 1,372 |
| Office furniture and fixtures | 708 | | 744 |
| Other equipment | 685 | | 682 |
| Site equipment | 1,718 | | 1,393 |
| Ground station equipment | 111 | | 111 |
| Total | 127,609 | | 98,011 |
| Less: accumulated depreciation | (43,710) | | (27,460) |
| Property and equipment — net | $ | 83,899 | | | $ | 70,551 | |
Depreciation of property and equipment from continuing operations was $9.0 million and $3.2 million, for the three months ended June 30, 2022 and 2021, respectively, and $16.3 million and $5.6 million for the six months ended June 30, 2022 and 2021, respectively. The Company disposed of property and equipment, which consisted of site equipment, furniture and ground station equipment of $36 thousand and $0.7 million, during the six months ended June 30, 2022 and 2021, respectively, for a loss of $0 for the three and six months ended June 30, 2022 and $0 and $24 thousand for the three and six months ended June 30, 2021, respectively.
9. Debt and Other Financing
The carrying value of the Company’s outstanding debt consisted of the following amounts:
| | | | | | | | | | | |
| June 30, | | December 31, |
| 2022 | | 2021 |
| (in thousands) |
| Current portion of long-term debt | $ | — | | | $ | — | |
| Non-current portion of long-term debt | 74,126 | | | 74,126 | |
| Total long-term debt | 74,126 | | | 74,126 | |
| Unamortized debt issuance cost | (1,701) | | | (2,718) | |
| Outstanding balance | $ | 72,425 | | | $ | 71,408 | |
The outstanding debt was solely comprised of loans from related parties with effective interest rates of 7.41% to 8.00%.
Bridge Notes and Related Transactions
On February 2, 2021, Legacy BlackSky amended its omnibus agreement dated June 27, 2018 (the “2021 Omnibus Amendment”). As a result of the amendment, Legacy BlackSky was permitted to enter into additional indebtedness by issuing new subordinated, unsecured convertible promissory notes (the "Bridge Notes"), between February 2, 2021 and June 30, 2021, for up to an aggregate principal amount of $60 million.
During the period from February 2, 2021 through February 3, 2021, Legacy BlackSky completed the closing of its initial tranche of the Bridge Notes from existing stockholders. The aggregate principal amount of the Bridge Notes issued in the initial tranche was $18.1 million. All investors participating in the initial tranche also received incentive equity equal to 7 shares of class A common stock of Legacy BlackSky for each dollar invested. Certain investors participating in the initial tranche additionally received warrants exercisable for shares of Legacy BlackSky class A common stock in amounts ranging from 0.14% of Legacy BlackSky’s fully-diluted share capital for each dollar invested divided by $1.0 million to 3.5% of Legacy BlackSky’s fully-diluted share capital (Note 10). On February 18, 2021, the Company completed the closing of a second tranche of the Bridge Notes, raising an aggregate principal amount of $40.0 million from an existing stockholder and from new investors. Participants in the second tranche did not receive shares of Legacy BlackSky class A common stock or warrants to purchase Legacy BlackSky class A common stock.
Upon the closing of the 2 previously mentioned tranches, $1.9 million of Bridge Notes remained available to be offered to certain shareholders under terms similar to the initial tranche pursuant to a rights offering (“Rights Offering”). The Company subsequently completed the Rights Offering in June 2021 with a total of $0.5 million additional investment, resulting in final aggregate proceeds of $58.6 million in principal investments pursuant to the Bridge Notes. As the terms of the Rights Offering were substantially identical to those offered in the initial tranche of the Bridge Notes, participants received 7 shares of the Legacy BlackSky's class A common stock for each dollar invested, as well as warrants.
The Bridge Notes, in all 3 tranches, bore interest at a rate of 10% and had a maturity date of April 30, 2025. There were no covenants in the Bridge Notes that were tied to financial metrics. The Company made an irrevocable election to carry the Bridge Notes at fair value.
In connection with the Merger, all of the Company’s issued and outstanding Bridge Notes were converted into Legacy BlackSky class A common stock at a conversion price of 80% of the deemed value of a single
Legacy BlackSky class A common share and, immediately thereafter, those Legacy BlackSky class A common shares were exchanged for Osprey class A common shares based the class A common stock exchange ratio. As of December 31, 2021, the Company had no convertible Bridge Notes outstanding.
In connection with the 2021 Omnibus Amendment, the investors guaranteeing the Silicon Valley Bank (“SVB”) line of credit further reaffirmed their guarantees and received a one-time issuance of 7 shares of Legacy BlackSky class A common stock for every dollar guaranteed. Additionally, Legacy BlackSky agreed to pay a fee to each of its senior secured lenders (“Consent Fees”). The Consent Fees were payable in either cash or shares of Legacy BlackSky’s class A common stock at the choice of the lender. The Consent Fees were considered variable share-settled liabilities and were recorded at fair value. All of the Consent Fees were settled for cash at the closing of the Merger.
The following table summarizes the additional shares of Legacy BlackSky class A common stock and warrants to purchase Legacy BlackSky class A common stock issued as a result of the Bridge Notes.
| | | | | | | | | | | |
| Legacy BlackSky Class A Common Stock(1) | | Legacy BlackSky Class A Common Stock Warrants(1) |
| (in thousands) |
| Issued to SVB guarantors | 8,485 | | | — | |
| Issued in connection with the initial tranche of Bridge Notes | 11,544 | | | 3,873 | |
| Issued as incentive shares and as incentive warrants, in connection with the Rights Offering | 314 | | | 51 | |
| Total | 20,343 | | | 3,924 | |
(1) Issuance of class A common stock and class A common stock warrants has been retroactively restated to give effect to the reverse recapitalization.
In connection with the Merger, all issued and outstanding Legacy BlackSky Bridge Notes and class A common stock warrants granted in accordance with the Bridge Notes were automatically exercised into Legacy BlackSky class A common stock and those shares were exchanged for the Company's common shares at the exchange rate applicable to the Company’s common stock.
Loans from Related Parties
After the Merger, the Company’s primary debt (and its sole secured debt) consists of its amended and restated loan and security agreement dated October 31, 2019, as amended or modified from time to time, with Intelsat Jackson Holdings SA (“Intelsat”) and Seahawk SPV Investment LLC (“Seahawk”). Interest accrues on the amounts outstanding under this facility at a fixed rate of 4% until October 31, 2022, 9% from November 1, 2022 to October 31, 2023, and 10% from November 1, 2023 to the maturity date of October 31, 2024. During the 4% interest period, the amount of accrued interest is added, on a pro-rata basis, to the outstanding principal amount of each lender’s advances on October 31, 2020, October 31, 2021, and October 31, 2022. Thereafter, interest is payable in cash semi-annually in arrears commencing on May 1, 2023. This facility is secured by substantially all of the Company’s assets, is guaranteed by the Company’s subsidiaries, and contains customary covenants and events of default. There are no covenants tied to financial metrics.
Fair Value of Debt
The estimated fair value of all of the Company’s outstanding long-term debt was $68.8 million and $76.1 million as of June 30, 2022 and December 31, 2021, respectively, which is different than the historical costs of such long-term debt as reflected in the Company’s unaudited condensed consolidated balance sheets.
The fair value of the long-term debt was estimated using Level 3 inputs, based on interest rates available for debt with terms and maturities similar to the Company’s existing debt arrangements and credit rating.
Compliance with Debt Covenants
As of June 30, 2022, all debt instruments contain customary covenants and events of default. There are no covenants tied to financial metrics and the Company was in compliance with all non-financial covenants as of June 30, 2022.
10. Equity Warrants Classified as Derivative Liabilities
Equity warrants that are classified as derivative liabilities must be measured at fair value upon issuance and re-valued at the end of each reporting period through expiration and are included in derivative liabilities in the Company's unaudited condensed consolidated balance sheets. Any change in fair value between the respective reporting dates is recognized as an unrealized gain or loss in the accompanying unaudited condensed consolidated statements of operations and comprehensive loss (Note 16). In the six months ended June 30, 2022, the Company's derivative liabilities were made up of only the equity warrants and the Sponsor Shares. In the six months ended June 30, 2021, the Company's derivative liabilities included warrants, Consent Fees from the Bridge Notes (see Note 9) and Legacy BlackSky preferred stock warrants.
The following table is a summary of the number of shares of the Company’s Class A common stock issuable upon exercise of warrants at June 30, 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Number of Shares | | Exercise Price | | Redemption Price | | Expiration Date | | Classification | | Gain (loss) in value for the six months ended June 30, 2022 | | Fair Value at June 30, 2022 |
| (in thousands) | | | | | | | | | | (in thousands) |
| Public Warrants | 15,813 | | | $ | 11.50 | | | $ | 18.00 | | | 9/9/2026 | | Liability | | $ | 2,214 | | | $ | 6,483 | |
| Private Placement Warrants | 4,163 | | | $ | 11.50 | | | $ | 18.00 | | | 9/9/2026 | | Liability | | 249 | | | 2,248 | |
| Private Placement Warrants | 4,163 | | | $ | 20.00 | | | $ | 18.00 | | | 9/9/2026 | | Liability | | (416) | | | 1,415 | |
In addition, the Company has 1.8 million Class A common stock warrants outstanding which have an exercise price of $0.11 and expiration dates from June 27, 2028 to October 31, 2029. These warrants are equity classified and are included in additional paid-in capital in the Company’s unaudited condensed consolidated balance sheets.
11. Other (Expense) Income
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three months ended June 30, | | Six months ended June 30, |
| | 2022 | | 2021 | | 2022 | | 2021 |
| | (in thousands) |
| Loss on issuance of Bridge Notes tranche one | | $ | — | | | $ | — | | | $ | — | | | $ | (84,291) | |
| Loss on issuance of Bridge Notes tranche two | | — | | | — | | | — | | | (12,185) | |
| Loss on issuance of Bridge Notes Rights Offering | | — | | | (3,193) | | | — | | | (3,193) | |
| Debt issuance costs expensed for debt carried at fair value | | — | | | (95) | | | — | | | (47,718) | |
| | | | | | | | |
| Other | | (42) | | | 9 | | | (40) | | | 17 | |
| | $ | (42) | | | $ | (3,279) | | | $ | (40) | | | $ | (147,370) | |
In February 2021, Legacy BlackSky issued Bridge Notes in 2 tranches (Note 9). The first tranche of the Bridge Notes were issued at par to several existing investors at a principal amount of $18.1 million and a fair value of $24.2 million. Additionally, certain investors in the first tranche of Bridge Notes received 11.5 million shares of Legacy BlackSky class A common stock with a fair value of $59.8 million and warrants to purchase
3.9 million shares of Legacy BlackSky class A common stock with a fair value of $18.4 million. The transaction involved investments primarily by the existing Legacy BlackSky investors at that time. Legacy BlackSky, which had an external valuation performed on the Bridge Notes, Legacy BlackSky class A common stock, and Legacy BlackSky warrants, determined that the fair value of the financial instruments issued exceeded the cash proceeds received. Since no unstated rights and/or privileges were identified with the first tranche of the Bridge Notes, Legacy BlackSky recorded a loss on issuance of $84.3 million.
The second tranche of the Bridge Notes were issued at par to several new investors and an existing investor at a principal amount of $40.0 million and a fair value of $52.2 million, resulting in a loss on issuance of $12.2 million.
Legacy BlackSky incurred and expensed $47.6 million in debt issuance costs related to the Bridge Notes issued in February 2021 and the modification of existing debt arrangements at that time. These debt issuance costs consisted of 8.5 million shares of Legacy BlackSky class A common stock valued at $43.9 million that were issued to certain guarantors in conjunction with modification of Legacy BlackSky’s SVB line of credit and $3.7 million paid to third-parties in cash.
The debt issuance costs were expensed because the Bridge Notes were being carried on the balance sheet at fair value. The modification of existing debt did not qualify as a troubled debt restructuring, nor did it result in the extinguishment of the debt.
12. Stockholders’ Equity
Class A Common Stock
As of June 30, 2022, the Company was authorized to issue 300.0 million shares of Class A common stock and 100.0 million shares of preferred stock.
Issued and outstanding stock as of June 30, 2022 consisted of 120.9 million and 118.5 million shares of Class A common stock, respectively. The par value of each share of the class A common stock is $0.0001 per share.
The Company had reserved shares of Class A common stock for issuance in connection with the following:
| | | | | | | | | | | |
| June 30, | | December 31, |
| 2022 | | 2021 |
| (in thousands) |
| Common stock warrants (exercisable for class A common stock) treated as equity | 1,770 | | | 1,770 | |
| Stock options outstanding | 4,690 | | | 5,022 | |
| Restricted stock units outstanding | 6,848 | | | 10,959 | |
| Public Warrants (exercisable for class A common stock) treated as liability | 15,813 | | | 15,813 | |
| Private Placement Warrants (exercisable for class A common stock) treated as liability | 8,325 | | | 8,325 | |
| Shares available for future grant | 141,628 | | | 140,951 | |
| Total class A common stock reserved | 179,074 | | | 182,840 | |
The Company has approximately 2.4 million Sponsor Earn-Out Shares that are subject to specific lock-up provisions and potential forfeitures depending upon the post-Merger performance of the Company’s Class A common stock, and therefore, are required to be recorded as derivative liabilities at their fair value and adjusted to fair value at each reporting period. As a result, as of June 30, 2022 and December 31, 2021, the Company's derivative liabilities in the unaudited condensed consolidated balance sheets included Sponsor Shares of $3.3 million and $4.7 million, respectively. The Company recorded a $1.4 million gain on derivatives in the Company’s unaudited condensed consolidated statements of operations and comprehensive loss for the six months ended June 30, 2022 related to the fair value adjustments of these Sponsor Earn-Out Shares. The Sponsor Earn-Out Shares have the following provisions:
| | | | | | | | |
| | Terms |
| Contractual Life | | Seven years from the closing date of the Merger |
| | |
| Release Provision | | Exactly half of the Sponsor Earn-Out Shares have a release provision ("Release") at such time that the volume weighted average price ("VWAP") is equal to, or greater than, $15.00 per share for 10 of any 20 consecutive trading days. The remaining Sponsor Shares Release at such time that the VWAP is equal to, or greater than, $17.50 per share for the of any 20 consecutive trading days. There is an additional provision for acceleration of the Release upon a defined change in control. |
| | |
| Forfeiture Provision | | If, within the seven year period, the Sponsor Earn-Out Shares have not met the Release provisions, the Sponsor Earn-Out Shares will automatically forfeit and be cancelled. |
13. Net Loss Per Share of Class A Common Stock
The following table includes the calculation of basic and diluted net (loss) income per share:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2022 | | 2021 | | 2022 | | 2021 |
| | (in thousands except per share information) |
| Loss from continuing operations | | $ | (26,278) | | | $ | (34,563) | | | $ | (46,266) | | | $ | (203,119) | |
| Loss from discontinued operations | | — | | | (1,022) | | | — | | | (1,022) | |
| Net loss available to common stockholders | | $ | (26,278) | | | $ | (35,585) | | | $ | (46,266) | | | $ | (204,141) | |
| | | | | | | | |
| Basic and diluted net loss per share - continuing operations | | $ | (0.22) | | | $ | (0.61) | | | $ | (0.40) | | | $ | (3.87) | |
| Basic and diluted net loss per share - discontinued operations | | — | | | (0.02) | | | — | | | (0.02) | |
| Basic and diluted net loss per share | | $ | (0.22) | | | $ | (0.63) | | | $ | (0.40) | | | $ | (3.89) | |
| | | | | | | | |
| Shares used in the computation of basic and diluted net loss per share | | 118,112 | | | 56,704 | | | 116,803 | | | 52,434 | |
The potentially dilutive securities listed below were not included in the calculation of diluted weighted average common shares outstanding, as their effect would have been anti-dilutive during the three and six months ended June 30, 2022 and 2021.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | Three and six months ended June 30, | | | | | | | | | | | | | |
| | | | | 2022 | | 2021 | | | | | | | | | | | | | |
| | | | | (in thousands) | | | | | | | | | | | | | |
| Restricted class A common stock | | | | | 100 | | | 580 | | | | | | | | | | | | | | |
| Common Stock warrants | | | | | 1,770 | | | 11,331 | | | | | | | | | | | | | | |
| Stock options | | | | | 4,690 | | | 2,643 | | | | | | | | | | | | | | |
| Restricted stock units | | | | | 6,848 | | | 8,946 | | | | | | | | | | | | | | |
| Public Warrants (exercisable for class A common stock) treated as liability | | | | | 15,813 | | | — | | | | | | | | | | | | | | |
| Private Placement Warrants (exercisable for class A common stock) treated as liability | | | | | 8,325 | | | — | | | | | | | | | | | | | | |
| Sponsor earn-out shares | | | | | 2,372 | | | — | | | | | | | | | | | | | | |
| Series A redeemable convertible preferred stock | | | | | — | | | 789 | | | | | | | | | | | | | | |
| Series B and B-1 redeemable convertible preferred stock | | | | | — | | | 4,714 | | | | | | | | | | | | | | |
| Series C redeemable convertible preferred stock | | | | | — | | | 20,189 | | | | | | | | | | | | | | |
| 2021 Convertible Bridge Notes as converted into common stock | | | | | — | | | 7,870 | | | | | | | | | | | | | | |
| Class A common stock warrants (exercisable for common stock) treated as liability | | | | | — | | | 3,917 | | | | | | | | | | | | | | |
| Class A common stock warrants (as exercised for Class A Common Stock) treated as liability in connection with the Rights Offering | | | | | — | | | 52 | | | | | | | | | | | | | | |
| Common stock issuable for consent fees treated as a liability | | | | | — | | | 315 | | | | | | | | | | | | | | |
| Series B preferred stock warrants | | | | | — | | | 117 | | | | | | | | | | | | | | |
| Series C preferred stock warrants | | | | | — | | | 97 | | | | | | | | | | | | | | |
14. Stock-Based Compensation
The Company adopted 2 equity incentive plans in prior years. Legacy BlackSky issued equity and equity-based awards under its 2014 stock incentive plan (the “2014 Plan”) and 2011 stock incentive plan (the “2011 Plan”, together with the 2014 Plan, collectively the “Plans”), which are now administered by the Company’s board of directors. The Plans are no longer active; however, outstanding awards granted under these Plans will not be affected. Both Plans allowed the board of directors to grant stock options, designated as incentive or nonqualified, and stock awards to employees, officers, directors, and consultants. Stock options were granted with an exercise price per share equal to at least the estimated fair value of the underlying class A common stock on the date of grant. The vesting period was determined through individual award agreements and was generally over a four-year period. Awards generally expired 10 years from the date of grant. As of June 30, 2022, the Company had 41 thousand and 1.6 million options outstanding, respectively, under the 2011 and 2014 Plans.
The stock-based compensation expense attributable to continuing operations was included in the unaudited condensed consolidated statements of operations and comprehensive loss as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | Six Months Ended June 30, |
| | 2022 | | 2021 | | 2022 | | 2021 |
| | (in thousands) |
| Imagery & software analytical service costs, excluding depreciation and amortization | | $ | 304 | | | $ | — | | | $ | 1,105 | | | $ | — | |
| Engineering & systems integration costs, excluding depreciation and amortization | | 44 | | | — | | | 165 | | | — | |
| Selling, general and administrative | | 2,638 | | | 264 | | | 11,956 | | | 772 | |
| Total stock-based compensation expense | | $ | 2,986 | | | $ | 264 | | | $ | 13,226 | | | $ | 772 | |
For the three and six months ended June 30, 2021, the Company did not record any stock-based compensation expense for the restricted stock units ("RSU"s) granted during that time for which vesting only commenced upon satisfaction of a performance condition. This performance condition attributable to the RSUs was not deemed probable until occurrence of the Merger as the Merger was not within the control of Legacy BlackSky. Additionally, the Company recorded stock-based compensation related to capitalized internal labor for software development activities of $0.4 million and $0 during the three months ended June 30, 2022 and 2021, respectively, and $1.0 million and $0 during the six months ended June 30, 2022 and 2021, respectively. These amounts are included in property, plant, and equipment - net on the unaudited condensed consolidated balance sheets.
Stock Options
Following the Merger, the outstanding stock options issued under the 2014 Plan may be exercised (subject to their original vesting, exercise and other terms and conditions) to purchase a number of shares of class A common stock equal to the number of shares of Legacy BlackSky class A common stock, as adjusted for the common stock exchange ratio, subject to the same terms and conditions as were applicable to such Legacy BlackSky stock option (each an “Assumed Company Stock Option”). The exercise price per share of each Assumed Company Stock Option was equal to the quotient obtained by dividing the exercise price per share applicable to such Legacy BlackSky stock option by the common stock exchange ratio.
The Black-Scholes option pricing model is used to determine the fair value of options granted. The Company utilized assumptions concerning expected term, a risk-free interest rate, and expected volatility to determine such values. A summary of the weighted-average assumptions used by the Company is presented below for the six months ended June 30, 2022; there were no stock options awarded during the six months ended June 30, 2021:
| | | | | |
| Fair value per common share | $2.10 |
| Weighted-average risk-free interest rate | 3.20 | % |
| Volatility | 33.90 | % |
| Expected term (in years) | 8.0 |
| Dividend rate | 0 | % |
Legacy BlackSky historically adjusted the exercise price of certain outstanding stock options. For each award with an adjusted exercise price, Legacy BlackSky calculated the incremental fair value, which was the excess of the fair value of the modified award over the fair value of the original award immediately before the modification. The incremental fair value was recognized as stock-based compensation expense immediately to the extent that the modified stock option already had vested, and for stock options that were not yet vested, the incremental fair value has been recognized as stock-based compensation expense over the remaining vesting period.
A summary of the Company’s stock option activity under the Plans during the six months ended June 30, 2022 is presented below:
| | | | | | | | | | | | | | | | | | | | | | | |
| Options | | Weighted-Average Exercise Price | | Weighted Average Contractual Term | | Aggregate Intrinsic Value |
| (in thousands) | | | | (in years) | | (in thousands) |
| Outstanding - January 1, 2022 | 5,022 | | | $ | 4.4914 | | | | | |
| Granted | 294 | | | 2.1000 | | | | | |
| Exercised | (584) | | | 0.0431 | | | | | |
| Forfeited | (42) | | | 0.0121 | | | | | |
| Outstanding - June 30, 2022 | 4,690 | | | 4.9357 | | | 8.52 | | $ | 3,310 | |
| Exercisable - June 30, 2022 | 1,005 | | | 0.5100 | | | 6.56 | | 1,810 |
For options exercised, intrinsic value is calculated as the difference between the estimated fair value on the date of exercise and the exercise price. The total intrinsic value of options exercised during the six months ended June 30, 2022 and 2021 was $1.5 million and $4.4 million, respectively. The total fair value of options vested during the six months ended June 30, 2022 and 2021 was $0.2 million and $0.4 million, respectively.
As of June 30, 2022, there was $2.8 million of total unrecognized compensation cost, which is expected to be recognized over a weighted-average period of 3.3 years.
Restricted Stock Awards
In the year ended December 31, 2020, the Company granted restricted stock awards ("RSA")s, which vest based upon the individual award agreements and generally vest over a three to four-year period. These shares are deemed issued as of the date of grant, but not outstanding until they vest. The Company intends to settle the RSAs in stock, and the Company has the shares available to do so.
A summary of the Company’s nonvested RSA activity during the six months ended June 30, 2022 is presented below:
| | | | | | | | | | | |
| Restricted Stock Awards | | Weighted-Average Grant-Date Fair Value |
| (in thousands) | | |
| Nonvested - January 1, 2022 | 335 | | | $ | 0.0121 | |
| Vested | (156) | | | 0.0121 | |
| Canceled | (79) | | | 0.0121 | |
| Nonvested - June 30, 2022 | 100 | | | 0.0121 | |
The Company has not granted any RSAs since 2020.
As of June 30, 2022, there was $1 thousand of total unrecognized compensation cost related to nonvested RSAs granted under the Plan, which is expected to be recognized over a weighted-average period of 1.7 years. The total grant date fair value of shares vested during the six months ended June 30, 2022 was $2 thousand.
Restricted Stock Units
The Company granted an aggregate of 1.4 million RSUs to certain employees and service providers during the six months ended June 30, 2022 under the 2021 Plan. The general vesting provisions are that 25% will vest on the one-year anniversary of the vesting commencement date and 75% will vest ratably over 12 consecutive quarters on specified quarterly vesting dates, with the first of such quarterly vesting dates occurring at least three months after the vesting of the initial 25% of the RSUs. During March 2022, 155 thousand RSUs were granted with a different vesting schedule, whereby 50% will be vest annually on the anniversary of the vesting commencement date.
A summary of the Company’s nonvested RSU activity during the six months ended June 30, 2022 is presented below:
| | | | | | | | | | | |
| Restricted Stock Units | | Weighted-Average Grant-Date Fair Value |
| (in thousands) | | |
| Nonvested - January 1, 2022 | 10,959 | | | $ | 6.7675 | |
| Granted | 1,429 | | | 1.8851 | |
| Vested | (5,336) | | | 6.9981 | |
| Canceled | (204) | | | 6.7167 | |
| Nonvested - June 30, 2022 | 6,848 | | | 5.5709 | |
A significant portion of the pre-Merger RSU grants vested in accordance with the vesting schedule of 180 days subsequent to the Merger. During the six months ended June 30, 2022, 2.1 million of the vested RSUs were used to satisfy payroll tax withholding obligations, which was recorded to additional paid-in capital totaling $4.0 million. Unrecognized compensation costs related to nonvested restricted stock units totaled $18.9 million as of June 30, 2022, which is expected to be recognized over a weighted-average period of 2.2 years.
15. Related Party Transactions
A summary of the Company’s related party transactions during the six months ended June 30, 2022 is presented below:
| | | | | | | | | | | | | | | | | | | | |
| | | | Amount Due to Related Party as of |
| | | | June 30, | | December 31, |
| | | | 2022 | | 2021 |
| Name | Nature of Relationship | Description of the Transactions | | (in thousands) |
| Seahawk | Debt Issuer | In 2019, the Company raised and converted $18.4 million from prior debt into new, outstanding debt and issued 13.5 million warrants to purchase Legacy BlackSky common stock. | | $ | 19,977 | | | $ | 19,977 | |
| Intelsat | Debt Issuer | In 2019, the Company entered into a term loan facility for $50.0 million and issued 20.2 million warrants to purchase Legacy BlackSky common stock. | | 54,149 | | | 54,149 | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | Amount Due to Related Party as of |
| | | Total Payments in the six months ended June 30, | | June 30, | | December 31, |
| Nature of Relationship | | 2022 | | 2021 | | 2022 | | 2021 |
| Name | Description of the Transactions | (in thousands) |
| LeoStella | Joint Venture | Design, development and manufacture of multiple satellites | $ | 17,149 | | | $ | 11,226 | | | $ | 1,537 | | | $ | 8,381 | |
| X-Bow | Equity Method Investee | In 2017, the Company received stock in X-Bow. As of June 30, 2022, the Company had a 15.1% investment in X-Bow and had one Board seat. As described in Note 6, the Company has engaged X-Bow to develop a rocket for the Company. | — | | | 1,865 | | | 0 | | — | |
| Palantir Technologies | Strategic Partner | Multi-year software subscription agreement for $8.0 million | 756 | | | — | | | — | | | — | |
| Ursa Space Systems | Strategic Partner | The chairman of the Company’s board of directors, Will Porteous, is also an investor and member of the board of directors of Ursa Space Systems. | 333 | | | — | | | — | | | 83 | |
Interest on the term loan facility is accrued and compounded annually. No significant interest payments were made in the six months ended June 30, 2022 or 2021. The Company had interest due to related parties in the amount of $2.0 million as of June 30, 2022, which has been recorded as accrued interest.
16. Fair Value of Financial Instruments
Recurring basis
The following tables present information about the Company’s liabilities that are measured at fair value on a recurring basis as of June 30, 2022 and December 31, 2021, as well as indicate the fair value hierarchy level of the valuation techniques and inputs that the Company utilized to determine such fair value:
| | | | | | | | | | | | | | | | | | | | |
| June 30, 2022 | | Quoted Prices in Active Markets | | Significant Other Observable Input | | Significant Other Unobservable Inputs |
| | (Level 1) | | (Level 2) | | (Level 3) |
| | (in thousands) |
| Liabilities | | | | | | |
| Public Warrants | | $ | 6,483 | | | $ | — | | | $ | — | |
| Private Placement Warrants | | — | | | — | | | 3,663 | |
| Sponsor Shares | | — | | | — | | | 3,285 | |
| | $ | 6,483 | | | $ | — | | | $ | 6,948 | |
| | | | | | | | | | | | | | | | | | | | | | |
| December 31, 2021 | | Quoted Prices in Active Markets | | Significant Other Observable Input | | Significant Other Unobservable Inputs | | |
| | (Level 1) | | (Level 2) | | (Level 3) | | |
| | (in thousands) | | |
| Liabilities | | | | | | | | |
| Public Warrants | | $ | 8,697 | | | $ | — | | | $ | — | | | |
| Private Placement Warrants | | — | | | — | | | 3,496 | | | |
| Sponsor Shares | | — | | | — | | | 4,732 | | | |
| | $ | 8,697 | | | $ | — | | | $ | 8,228 | | | |
The carrying values of the following financial instruments approximated their fair values as of June 30, 2022 and December 31, 2021 based on their maturities: cash and cash equivalents, restricted cash, short-term investments, accounts receivable, prepaid expenses and other current assets, accounts payable, accrued liabilities, leases payable and other current liabilities.
There were no transfers into or out of any of the levels of the fair value hierarchy during the six months ended June 30, 2022 or 2021.
Changes in the fair value of the Level 3 liabilities during the six months ended June 30, 2021 of $15.5 million included the Private Placement Warrants, Sponsor Shares, Legacy BlackSky preferred stock warrants and Consent Fees. The following is a summary of changes in the fair value of the Level 3 liabilities during the six months ended June 30, 2022:
| | | | | | | | | | | |
| Sponsor Shares | | Private Placement Warrants |
| (in thousands) |
| Balance, January 1, 2022 | $ | 4,732 | | | $ | 3,496 | |
| (Gain) loss from changes in fair value | (1,447) | | | 167 | |
| Balance, June 30, 2022 | $ | 3,285 | | | $ | 3,663 | |
17. Commitments and Contingencies
Legal Proceedings
In the normal course of business, the Company may become involved in various legal proceedings which, by their nature, may be inherently unpredictable and which could have a material effect in the unaudited condensed consolidated financial statements, taken as a whole.
As of June 30, 2022, the Company was not aware of any
issues under reviewadditional pending, or threatened, governmental actions or legal proceedings to which the Company is, or will be, a party that,
couldif successful, would result in
significant payments, accrualsa material impact to its business or
material deviation from its position.financial condition or results of operations.
Other Contingencies
The Company may be subjectanalyzed its unique facts and circumstances related to potential examination by federal,obligations in a certain state jurisdiction, including the delivery nature of its prior year intercompany services, payroll and city taxingother benefits-related services, current shared services between the parent and subsidiaries, and changing state laws and interpretations of those laws, and has determined that the Company may have an indirect tax obligation.
The Company has continued correspondence with the applicable authorities in an effort toward identifying a taxpayer-favorable resolution of the areas of income taxes. These potential examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal, state and city tax laws.liabilities. The Company is subjecthas recognized a liability including interest and penalties based on its best estimate as of June 30, 2022.
The following table summarizes the estimated indirect tax liability activity during the six months ended June 30, 2022:
| | | | | | | |
| (in thousands) | | |
| Balance, January 1, 2022 | $ | 737 | | | |
| Payments | — | | | |
| Adjustment to Expense | 7 | | | |
| Balance, June 30, 2022 | $ | 744 | | | |
The Company continues to income tax examinations by major taxing authorities since inception. analyze the additional obligations it may have, if any, and it will adjust the liability accordingly.
Other Commitments
The Company’s management does not expect thatCompany has commitments for multi-launch and integration services with launch services providers. As of June 30, 2022, the total amountCompany had a commitment for 1 launch, to include up to 2 satellites at future
Table of unrecognized tax benefits will materially change overContents
estimated launch dates for $1.7 million. The terms of the
next twelve months.The provision for income taxes was deemed to be immaterialarrangement also allows for the periods presented.
OSPREY TECHNOLOGY ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2019
(Unaudited)
Net Loss Per Common Share
Net loss per common share is computed by dividing net loss byCompany to remanifest the weighted average numbersatellites if significant delays in excess of shares365 days or other inexcusable delays occur with the provider. Subsequent to remanifest efforts four months after the 365 days, the Company can request a refund of common stock outstandingall recoverable costs. Payment terms are 15 days from invoice date.
The company entered into a commitment during the period, excluding sharessix months ended June 30, 2022 to provide a minimum guarantee of common stock subject$3.0 million to forfeiture. Weighted average shares were reduceda vendor as part of a reseller agreement in exchange for the effect of an aggregate of 1,031,250a license to promote and 1,237,500 shares of common stock, respectively, that were subject to forfeiture if the over-allotment option was not exercised by the underwriters (see Note 7). At September 30, 2019distribute products and 2018, the Companyservices. We did not haveenter into any dilutive securitiesother material commitments during the six months ended June 30, 2022.
18. Concentrations, Risks, and other contracts that could, potentially, be exercised or converted into shares of common stockUncertainties
The Company maintains all cash and
then share in the earnings of the Company. As a result, diluted loss per common share is the same as basic loss per share for the period presented.Concentration of Credit Risk
cash equivalents with one financial institution. Financial instruments that potentially subject the Company to concentrations of credit risk consistare primarily accounts receivable and cash deposits.
For the three months ended June 30, 2022 and 2021, revenue from customers representing 10% or more of a cash account in a financial institution, which, at times, may exceed the Federal Depository Insurance Coverageconsolidated revenue from continuing operations was $7.1 million and $1.8 million, respectively, and $15.1 million and $6.1 million, respectively, for the six months ended June 30, 2022 and 2021. Accounts receivable related to these customers as of $250,000. June 30, 2022 and December 31, 2021 was $0.8 million and $1.3 million, respectively.
Revenue from the U.S. federal government and agencies was $12.1 million and $6.2 million for the three months ended June 30, 2022 and 2021, respectively, and $23.2 million and $12.3 million for the six months ended June 30, 2022 and 2021, respectively. Accounts receivable related to U.S. federal government and agencies was $3.0 million and $2.6 million as of June 30, 2022 and December 31, 2021, respectively.
The Company
hasgenerally extends credit on account, without collateral. Outstanding accounts receivable balances are evaluated by management, and accounts are reserved when it is determined collection is not
experienced lossesprobable. As of June 30, 2022 and December 31, 2021, the Company evaluated the realizability of the aged accounts receivable, giving consideration to each customer’s financial history and liquidity position, credit rating and the facts and circumstances of collectability on
thiseach outstanding account, and
management believes the Company isdid not
exposed to significant risks on such account.Fair Value of Financial Instruments
The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements,” approximates the carrying amounts represented in the accompanying balance sheet, primarily due to their short-term nature.
Recent Accounting Pronouncements
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s condensed financial statements.
Note 3—Initial Public Offering
Pursuant to the Initial Public Offering, the Company sold 27,500,000 units at a purchase price of $10.00 per Unit. On November 13, 2019, in connection with the underwriters’ exercise of the over-allotment option in full, the Company sold an additional 4,125,000 Units at a purchase price of $10.00 per Unit. Each Unit consists of one share of Class A common stock andone-half of one warrant (“Public Warrant”). Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $11.50 per share, subject to adjustment (see Note 7).
Note 4—Private Placement
Simultaneously with the closing of the Initial Public Offering, the Sponsor purchased an aggregate of 7,500,000 Private Placement Warrants at a price of $1.00 per Private Placement Warrant,significant reserve for an aggregate purchase price of $7,500,000. On November 13, 2019, in connection with the underwriters’ exercise of the over-allotment option in full, the Sponsor purchased an aggregate of 825,000 additional Private Placement Warrants, for an aggregate purchase price of $825,000. Each Private Placement Warrant is exercisable to purchase one share of Class A common stock at an exercise price of $11.50. The proceeds from the Private Placement Warrants were added to the proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Warrants will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law), and all underlying securities will expire worthless.
uncollectible account.OSPREY TECHNOLOGY ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2019
(Unaudited)
Note 5—Related Party Transactions
Founder Shares
In June 2018, the Sponsor purchased 125,000 shares (the “Founder Shares”) of the Company’s Class B common stock for an aggregate price of $25,000. In September 2018, the Company effectuated a69-for-1 forward stock split of its Class B common stock, resulting in an aggregate of 8,625,000 Founder Shares outstanding, of which an aggregate of up to 1,125,000 shares were subject to forfeiture to the extent the underwriters’ over-allotment option was not exercised in full or in part (see Note 6). As adjusted for the 1.1 for 1 stock dividend in October 2019 (see below), such amounts totaled 9,487,500 Founder Shares outstanding, of which 1,237,500 shares were subject to forfeiture. In April 2019, the Sponsor contributed back to the Company, for no consideration, 1,581,250 Founder Shares (as adjusted for the 1.1 for 1 stock dividend in October 2019), resulting in an aggregate of 7,187,500 Founder Shares outstanding, of which an aggregate of up to 937,500 shares were subject to forfeiture. In October 2019, the Company effected a 1.1 for 1 stock dividend for each share of Class B common stock outstanding, resulting in an aggregate of 7,906,250 Founder Shares outstanding, of which an aggregate of up to 1,031,250 shares were subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment option was not exercised in full or in part so that the Sponsor will own, on anas-converted basis, 20% of the Company’s issued and outstanding shares after the Initial Public Offering (assuming the Sponsor does not purchase any Public Shares in the Initial Public Offering). The Founder Shares will automatically convert into Class A common stock upon the consummation of a Business Combination on aone-for-one basis, subject to adjustments as described in Note 7. In connection with the underwriters’ exercise of the over-allotment option in full, 1,031,250 Founder Shares are no longer subject to forfeiture.
The Sponsor has agreed, subject to certain limited exceptions, not to transfer, assign or sell any of its Founder Shares until the earlier to occur of: (i) one year after the completion of a Business Combination or (ii) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Company’s stockholders having the right to exchange their shares of common stock for cash, securities or other property. Notwithstanding the foregoing, if the last sale price of the Class A common stock equals or exceeds $12.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within any30-trading day period commencing at least 150 days after a Business Combination, the Founder Shares will be released from thelock-up.
Promissory Note—Related Party
On September 12, 2018, the Company issued an unsecured promissory note to the Sponsor (the “Promissory Note”), pursuant to which the Sponsor agreed to loan the Company an aggregate of up to $300,000 to cover expenses related to the Initial Public Offering, of which $187,600 was outstanding as of September 30, 2019. The Promissory Note wasnon-interest bearing and payable on the earlier of December 31, 2019 or the completion of the Initial Public Offering. The outstanding balance under the Promissory Note in the amount of $224,992 was repaid in full on November 5, 2019.
Administrative Support Agreement
The Company entered into an agreement whereby, commencing on November 5, 2019, the Company has agreed to pay the Sponsor a total of $10,000 per month for office space, utilities and secretarial and administrative support. Upon completion of the Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees.
Related Party Loans
In order to finance transaction costs in connection with a Business Combination, the Sponsor, an affiliate of the Sponsor, or the Company’s officers and directors may, but are not obligated to, loan the Company funds from time to time or at any time, as may be required (“Working Capital Loans”). Each Working Capital Loan would be evidenced by a promissory note. The Working Capital Loans would either be paid upon consummation of a Business Combination, without interest, or, at the holder’s discretion, up to $1,500,000 of the Working Capital Loans may be converted into warrants at a price of $1.00 per warrant. The warrants would be identical to the Private Placement Warrants. In the event that a Business Combination does not close, the Company may use a portion of the proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used to repay the Working Capital Loans.
OSPREY TECHNOLOGY ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2019
(Unaudited)
Note 6—Commitments
Registration Rights
Pursuant to a registration rights agreement entered into on October 31, 2019, the Sponsor and holders of warrants issued upon conversion of Working Capital Loans, if any, will have registration rights to require the Company to register a sale of any of its securities held by them (in the case of the Founder Shares, only after conversion to Class A common stock). These holders will be entitled to make up to three demands, excluding short form registration demands, that the Company register such securities for sale under the Securities Act. In addition, these holders will have “piggy-back” registration rights to include such securities in other registration statements filed by the Company and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that the Company will not permit any registration statement filed under the Securities Act to become effective until termination of the applicablelock-up period. The Company will bear the expenses incurred in connection with the filing of any such registration statements.
Underwriting Agreement
The Company granted the underwriters a45-day option to purchase up to 4,125,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price, less the underwriting discounts and commissions. On November 13, 2019, the underwriters exercised their over-allotment option in full for an additional 4,125,000 Units.
The underwriters were paid a cash underwriting discount of $0.20 per Unit, or $6,325,000 in the aggregate. The underwriters are entitled to a deferred fee of $0.35 per Unit, or $11,068,750 in the aggregate. The deferred fee will be forfeited by the underwriters solely in the event that the Company fails to complete a Business Combination, subject to the terms of the underwriting agreement.
Note 7—Stockholder’s Equity
Preferred Stock—The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $0.0001 per share with such designations, voting and other rights and preferences as may be determined from time to time by the Company’s board of directors. At September 30, 2019, there were no shares of preferred stock issued or outstanding.
Class A Common Stock—The Company is authorized to issue 150,000,000 shares of Class A common stock with a par value of $0.0001 per share. Holders of Class A common stock are entitled to one vote for each share. At September 30, 2019, there were no shares of Class A common stock issued or outstanding.
Class B Common Stock—The Company is authorized to issue 25,000,000 shares of Class B common stock with a par value of $0.0001 per share. Holders of Class B common stock are entitled to one vote for each share. At September 30, 2019, there were 7,906,250 shares of Class B common stock issued and outstanding, of which an aggregate of up to 1,031,250 shares were subject to forfeiture to the extent that the underwriters’ over-allotment option was not exercised in full or in part, so that the Sponsor would own, on anas-converted basis, 20% of the Company’s issued and outstanding common stock after the Initial Public Offering (assuming the Sponsor did not purchase any Public Shares in the Initial Public Offering). In connection with the underwriters’ exercise of the over-allotment option in full, 1,031,250 Founder Shares are no longer subject to forfeiture.
Holders of Class B common stock will have the right to elect all of the Company’s directors prior to the consummation of a Business Combination. On any other matter submitted to a vote of the Company’s stockholders, holders of Class A common stock and Class B common stock will vote together as a single class on all other matters submitted to a vote of stockholders, except as required by law. These provisions of the Company’s Amended and Restated Certificate of Incorporation may only be amended if approved by holders of a majority of at least 90% of the Company’s common stock voting in a stockholder meeting.
The shares of Class B common stock will automatically convert into shares of Class A common stock at the time of a Business Combination on aone-for-one basis, subject to adjustment. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts offered in the Initial Public Offering and related to the closing of a Business Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on anas-converted basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion of the Initial Public Offering (not including the shares of Class A common stock underlying the Private Placement Warrants) plus all shares
OSPREY TECHNOLOGY ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2019
(Unaudited)
of Class A common stock and equity-linked securities issued or deemed issued in connection with a Business Combination (excluding any shares or equity-linked securities issued, or to be issued, to any seller in a Business Combination, any private placement-equivalent securities issued, or to be issued, to any seller in a Business Combination, or any private placement equivalent securities issued to the Sponsor or its affiliates upon conversion of loans made to the Company). Holders of Founder Shares may also elect to convert their shares of Class B common stock into an equal number of shares of Class A common stock, subject to adjustment as provided above, at any time.
Warrants—Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination or (b) 12 months from the closing of the Initial Public Offering; provided in each case that the Company has an effective registration statement under the Securities Act covering the shares of common stock issuable upon exercise of the Public Warrants and a current prospectus relating to them is available. The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of a Business Combination, the Company will use its best efforts to file with the SEC a registration statement for the registration, under the Securities Act, of the shares of Class A common stock issuable upon exercise of the Public Warrants. The Company will use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement, and a current prospectus relating thereto, until the expiration of the warrants in accordance with the provisions of the warrant agreement. Notwithstanding the above, if the Company’s Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but the Company will be required to use its best efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation.
Once the warrants become exercisable, the Company may redeem the Public Warrants:
in whole and not in part;
at a price of $0.01 per warrant;
upon not less than 30 days’ prior written notice of redemption;
if, and only if, the reported last sale price of the Company’s Class A common stock equals or exceeds $18.00 per share for any 20 trading days within a30-trading day period ending three business days before the Company sends the notice of redemption to the warrant holders; and
If, and only if, there is a current registration statement in effect with respect to the shares of Class A common stock underlying such warrants.
The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering, except that the Private Placement Warrants and the Class A common stock issuable upon the exercise of the Private Placement Warrants will not be transferable, assignable or salable until 30 days after the completion of a Business Combination, subject to certain limited exceptions. Additionally, the Private Placement Warrants will be exercisable on a cashless basis and benon-redeemable so long as they are held by the initial purchasers or their permitted transferees. If the Private Placement Warrants are held by someone other than the initial purchasers or their permitted transferees, the Private Placement Warrants will be redeemable by the Company and exercisable by such holders on the same basis as the Public Warrants.
If the Company calls the Public Warrants for redemption, management will have the option to require all holders that wish to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of shares of Class A common stock issuable upon exercise of the warrants may be adjusted in certain circumstances including in the event of a stock dividend, or recapitalization, reorganization, merger or consolidation. Additionally, in no event will the Company be required to net cash settle the warrants.
If the Company issues additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of a Business Combination at a newly issued price of less than $9.20 per share of Class A common stock (with such issue price or effective issue price to be determined in good faith by the Company’s board of directors and, in the case of any such issuance to the Sponsor or its affiliates, without taking into account any Founder Shares held by them, as applicable, prior to such issuance), the exercise price of the Public Warrants will be adjusted (to the nearest cent) to be equal to 115% of the higher of the market value (as defined in the warrant agreement) and the newly issued price.
OSPREY TECHNOLOGY ACQUISITION CORP.
NOTES TO CONDENSED FINANCIAL STATEMENTS
SEPTEMBER 30, 2019
(Unaudited)
If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of warrants will not receive any of such funds with respect to their warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such warrants. Accordingly, the warrants may expire worthless.
Note 8—19. Subsequent Events
The Company evaluated subsequent events through August 10, 2022 and transactionsdetermined that occurred after the balance sheet date up to the date that the financial statements were issued. Other than as described in these financial statements, the Company did not identify any subsequentthere have been no events that have occurred that would have required adjustmentrequire adjustments to our disclosures or disclosure in the unaudited condensed consolidated financial statements.
ItemITEM 2.
Management’s Discussion and Analysis of Financial Condition and Results of OperationsReferences in this report (the “Quarterly Report”) to “we,” “us” or the “Company” refer to Osprey Technology Acquisition Corp. References to our “management” or our “management team” refer to our officers and directors, and references to the “Sponsor” refer to Osprey Sponsor II, LLC. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of
the Company’sour financial condition and results of operations should be read in conjunction with
theour consolidated financial statements and
therelated notes
thereto containedappearing elsewhere in this Quarterly
Report. Certain information containedReport on Form 10-Q. As discussed in the
section titled “Special Note Regarding Forward Looking Statements,” the following discussion and analysis
set forth below includes forward-lookingcontains 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 and Section 21E of the Exchange Actuncertainties, as well as assumptions that, are not historical facts and involve risks and uncertainties thatif they never materialize or prove incorrect, could cause actualour results to differ materially from those expected and projected. All statements, other than statementsexpressed or implied by such forward-looking statements. Factors that could cause or contribute to these differences include, but are not limited to, those discussed in the section titled “Risk Factors” under Part I, Item IA of historical fact included in this Quarterlyour Annual Report including, without limitation, statementson Form 10-K. Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” regarding the Company’s financial position, business strategyto “BlackSky”, “the Company”, “we”, “us” and the plans and objectives of management for future operations, are forward-looking statements. Words such as “expect,” “believe,” “anticipate,” “intend,” “estimate,” “seek” and variations 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“our” refer to the Risk Factors section of the Registration Statement on FormS-1 (RegistrationNo. 333-234180) filed by the Company with the SEC. 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 formed under the laws of the State of Delaware on June 15, 2018, for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or other similar Business Combination with one or more businesses. We intend to effectuate our Business Combination using cash from the proceeds of the Initial Public Offering and the sale of the Private Placement Warrants, our capital stock, debt or a combination of cash, stock and debt.
The issuance of additional shares of our stock in a Business Combination:
may significantly dilute the equity interest of investors;
may subordinate the rights of holders of common stock if preferred stock is issued with rights senior to those afforded our common stock;
could cause a change of control if a substantial number of shares of our Class A common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors; and
may adversely affect prevailing market prices for our units, common stock and/or warrants.
Similarly, if we issue debt securities or otherwise incur significant indebtedness, it could result in:
default and foreclosure on our assets if our operating revenues after a Business Combination are insufficient to pay our debt obligations;
acceleration of our obligations to repay the indebtedness even if we have made all principal and interest payments when due if the debt security contains covenants that required the maintenance of certain financial ratios or reserves and we breach any such covenant without a waiver or renegotiation of that covenant;
our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;
our inability to obtain additional financing, if necessary, if the debt security contains covenants restricting our ability to obtain additional financing while such security is outstanding;
our inability to pay dividends on our common stock;
using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes;
limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;
increased vulnerability to adverse changes in general economic, industryoperations of Legacy BlackSky and competitive conditions and adverse changes in government regulation;
limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy; and
other disadvantages compared to our competitors who have less debt.
Results of Operations
We have neither engaged in any operations nor generated any revenues to date. Our only activities from June 15, 2018 (inception) through September 30, 2019 were organizational activities and those necessary to prepare for the Initial Public Offering, described below. We do not expect to generate any operating revenues until after the completion of our Business Combination. We expect to generatenon-operating income in the form of interest income on marketable securities held after the Initial Public Offering. 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.
For the three and nine months ended September 30, 2019, we had a net loss of $1,061 and $2,881, which consisted of formation and operating costs.
For the period from June 15, 2018 (inception) through September 30, 2018, we had a net loss of $798, which consisted of formation costs.
Liquidity and Capital Resources
As of September 30, 2019, we had cash of $35,405. Until the consummation of the Initial Public Offering, our only source of liquidity was an initial purchase of common stock by the Sponsor and loans from our Sponsor.
Subsequentits consolidated subsidiaries prior to the quarterly period covered by this Quarterly Report, on November 5, 2019, we consummated the Initial Public Offering of 27,500,000 Units at a price of $10.00 per Unit, generating gross proceeds of $275,000,000. Simultaneously withMerger and to BlackSky Technology Inc. and its consolidated subsidiaries, following the closing of the Initial Public Offering, weMerger.
General Overview
On September 9, 2021, Osprey consummated the saleMerger with Legacy BlackSky. Immediately following the Merger, Osprey changed its name to “BlackSky Technology Inc.” Legacy BlackSky survived the Merger and is now a wholly owned subsidiary of 7,500,000 Private Placement WarrantsBlackSky. As a special purpose acquisition company, Osprey had no pre-Merger operations other than to our Sponsor atidentify and consummate a pricemerger. Therefore, BlackSky’s operations post-Merger are attributable to those of $1.00 per Private Placement Warrant, generating gross proceedsLegacy BlackSky and its subsidiaries, and references to “BlackSky” or the “Company” should be read to include BlackSky’s wholly owned subsidiaries. References in this report to Company actions, assets/liabilities, or contracts may be references to actions taken, assets/liabilities held, or contracts entered into by one or more Company current subsidiaries; however the Company has distinguished between the actions taken by Legacy BlackSky or Osprey for certain time based, historical transactions.
The Company’s results of
$7,500,000.On November 13, 2019,operations and statements of assets and liabilities may not be comparable between periods as a result of the underwriters’ electionMerger.
Company Overview
We own and operate one of the industry's leading high-performance low earth orbit (“LEO”) small satellite constellations. Our constellation is optimized to fully exercise their over-allotment option,cost-efficiently capture imagery at high revisit rates where and when our customers need it. The orbital configuration of our constellation is designed to collect data on the most critical and strategic locations on Earth where we consummatedbelieve approximately 90% of the saleglobal GDP occurs. With fourteen satellites in orbit as of an additional 4,125,000 Units at $10.00 per Unit,June 30, 2022, our constellation is able to image certain locations every hour, from dawn to dusk, providing our customers with insights and situational awareness throughout the day. Our satellites are designed with agile pointing capabilities that enable our customers to task our constellation on demand to collect specific locations of interest. Our tasking methodology employs proprietary artificial intelligence (“AI”)-enabled software to efficiently collect images of the most important strategic and economic assets and areas of interest to our customers. We believe that our focus on critical strategies and economic infrastructure and the saleAI-enabled tasking of an additional 825,000 Private Placement Warrants,our constellation differentiates us from our competitors, who are dedicated primarily to mapping the entirety of the Earth every day and who, therefore, require hundreds of satellites to support their mission. Our focused approach enables us to deliver highly targeted and actionable intelligence with a smaller constellation that has the added benefit of greater operating and capital efficiencies.
Our Spectra AI software platform can, among other things, source millions of observations a day from our proprietary satellite constellation and from multiple external data sources including imaging, radar and radio frequency satellites, environmental sensors, asset tracking sensors, Internet-of-Things (“IoT”) connected devices, internet-enabled narrative sources, and a variety of geotemporal data feeds. Spectra AI employs advanced, proprietary AI and machine learning (“ML”) techniques to process, analyze, and transform these data feeds into alerts, information, and insights. Customers can access Spectra AI's data and analytics through easy-to-use web services or through platform application programming interfaces.
Our next generation satellites (“Gen-3”), expected to be operational during 2023, are designed to improve our imaging resolution even further and include advanced sensing technology for a broad set of imaging conditions, including nighttime, low-light, and a variety of weather conditions. We believe these advancements will expand the diversity and certainty of our analytics to continue to ensure our relevance to our customers. We believe the combination of our high-revisit, on-demand tasking small satellite constellation, our Spectra AI platform, and low constellation cost is disrupting the market for geospatial imagery and space-based data and analytics.
Our operating strategy is to continue to enhance the capabilities of our satellite constellation, to increase the number of third-party data sources processed by Spectra AI, and to expand our analytics offerings in order to increase the value we deliver to our customers. Our two operating assets—our satellite constellation and our Spectra AI software platform—are mutually reinforcing: as we capture ever more information about the world’s most important strategic and economic assets and locations, our proprietary database expands and increases its utility; enabling us to better detect, understand, and predict changes that matter most to our customers. Our business has a natural and powerful “flywheel” effect: the more data we collect and analyze, the more valuable the insights we can deliver to our customers.
Our current customer base and end market mix are weighted towards U.S. and international defense and intelligence customers and markets. We believe there are significant opportunities to expand our imagery and software analytical services, as well as our engineering and systems integration offerings, to customers both domestically and internationally. In addition, our products and services can benefit customers in a variety of commercial markets including, but not limited to, energy and utilities, insurance, commodities, mining, manufacturing, maritime and supply chain logistics, financial services, agriculture, environmental monitoring, disaster and risk management, engineering and construction, and consumer behavior.
We offer a variety of pricing and utilization options for our imagery and software analytical service offerings, including usage-based pricing, subscriptions and transactional licenses. These options provide customers flexible options to utilize our imagery and software analytical services in a manner that best suits their business needs. We offer a range of pricing tiers that enables the customer to manage collection priorities, where during critical events they can pay a premium to prioritize their monitoring and collection requirements. At other times, customers can select lower priority collections to allow for more economical utilization. We currently derive revenue from variable and fixed pricing plans that allow our customers to choose what matters most to them—platform licensing-levels, priority for imagery tasking, and whether to apply analytics or monitoring capabilities overtop the imaging service.
Components of Operating Results
Revenue
Our revenue is generated by selling imagery and software analytics services through our Spectra AI platform and by providing engineering and systems integration services to strategic customers on a project basis.
•Imagery and Software Analytical Services Revenue
◦Imagery: We offer our customers high-revisit, on-demand high resolution electro optical satellite imaging services. Through our Spectra AI platform, customers can directly task our proprietary satellite constellation to collect and deliver imagery over specific locations, sites, and regions that are critical to their operations. We offer customers several service level options that include basic plans for on-demand tasking or multi-year assured access programs, where customers can secure priority access and imaging capacity at a premium over a region of interest on a take or pay basis.
◦Data, Software, and Analytics: Our analytics services are also offered on a consumption or subscription basis and provide customers with access to our site monitoring, event monitoring and global data services. We leverage our proprietary AI and ML algorithms to analyze data coming from both our proprietary sensor network and third-party space based and terrestrial sources in real-time to provide data, insights, and analytics for our customers. We provide services related to object, change and anomaly detection, site monitoring, and enhanced analytics through which we can detect key pattern of life changes in critical locations. These critical locations can include strategic locations and infrastructure such as ports, airports, and construction sites; retail activity;
commodities stockpiles; and other sites that contain critical commodities and supply chain information.
We continue to enhance and integrate our offerings by performing capability development for customers while retaining the intellectual property rights. We provide technology enabled professional service solutions to support customer-specific software development requests, integration, testing, and training in order to embed our imagery and software analytical services into the customers organizational processes. We also provide software systems engineering development to support the efforts of certain customers to manage mass quantities of data.
We expect continued imagery and software analytical services revenue growth in the year ending December 31, 2022, as compared to the prior year as a result of increases in our satellite capacity and sales orders driven by stronger customer demand.
•Engineering and Systems Integration Revenue—We develop and deliver advanced launch vehicle, satellite and payload systems for specific strategic customers that desire to leverage our capabilities in mission systems engineering and operations, ground station operations, software, analytics and systems development. These systems are sold to government customers under fixed price contracts and are often bundled with our imagery services offerings. In certain cases, we retain rights to intellectual property for developed technology of $1.00 per Private Placement Warrant, generating total gross proceedscertain systems, and this paid effort offsets some of $42,075,000.Followingour product development effort.
We expect engineering and systems integration revenue growth as we continue to provide customers with unique engineering solutions and deliver critical design reviews.
Costs and Expenses
Our costs and expenses are incurred from the Initial Public Offering,following categories:
•Imagery and software analytical services costs primarily include internal aerospace and geospatial software development labor, third-party data and imagery, internal labor to support the exerciseground stations and space operations, and cloud computing and hosting services. Costs are expensed as incurred except for incremental costs to obtain a contract, primarily sales commissions, which are capitalized and amortized to selling, general and administrative expenses on a systematic basis consistent with the transfer of goods and services. Expense related to stock-based payments is classified in the unaudited condensed consolidated statements of operations and comprehensive loss based upon the classification of each employees’ cash compensation. We recognize stock-based compensation expense for those employees whose work supports the imagery and software analytical service costs we provide to customers, under imagery and software analytical service costs, excluding depreciation and amortization.
•Engineering and systems integration costs primarily include the cost of internal labor for design, integration, and engineering in support of long-term development contracts for launch vehicle, satellite, and payload systems. We also incur subcontract direct materials and external labor costs to build and test specific components, such as the communications system, payload demands, and sensor integration. We recognize stock-based compensation expense for those employees who provide engineering and systems integration support to customers, under engineering and systems integration costs, excluding depreciation and amortization.
Operating Expenses
Our operating expenses are incurred from the following categories:
•Selling, general, and administrative expense consists of salaries and benefit costs, development costs, professional fees, and other expenses which includes other personnel-related costs, stock-based compensation expenses for those employees who generally support our business and operations, and occupancy costs. Our development costs include internal labor costs to develop critical real-time software and geospatial analytic solutions and solution enhancements, including mapping, analysis, site target monitoring, and news feeds.
•Research and development expense consists of employees’ salaries, taxes, and benefits costs incurred for data science modeling and algorithm development related to our Spectra AI platform, and for the unique and strategic development efforts to support our long-term strategy. In addition, we began employing and classifying third-party vendors who fulfill our unique and strategic projects as research and development expense. We intend to continue to invest appropriate resources in research and development efforts, as we believe that investment is critical to maintaining our competitive position.
•Depreciation expense is related to property and equipment which mainly consists of operational satellites. Amortization expense is related to intangible assets which mainly consists of customer relationships.
Results of Operations for the Three and Six Months Ended June 30, 2022 and 2021
The following table provides the components of results of operations for the three and six months ended June 30, 2022 and 2021. Period to period comparisons are not necessarily indicative of future results.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | $ | | % | | Six Months Ended June 30, | | $ | | % | | |
| 2022 | | 2021 | | Change | | Change | | 2022 | | 2021 | | Change | | Change | | |
| (dollars in thousands) | | |
| Revenue | | | | | | | | | | | | | | | | | |
| Imagery & software analytical services | $ | 13,350 | | | $ | 5,118 | | | $ | 8,232 | | | 160.8 | % | | $ | 23,122 | | | $ | 11,116 | | | $ | 12,006 | | | 108.0 | % | | |
| Engineering & systems integration | 1,752 | | | 2,247 | | | (495) | | | (22.0) | % | | 5,876 | | | 3,543 | | | 2,333 | | | 65.8 | % | | |
| Total revenue | 15,102 | | | 7,365 | | | 7,737 | | | 105.1 | % | | 28,998 | | | 14,659 | | | 14,339 | | | 97.8 | % | | |
| Costs and expenses | | | | | | | | | | | | | | | | | |
| Imagery & software analytical service costs, excluding depreciation and amortization | 5,350 | | | 4,171 | | | 1,179 | | | 28.3 | % | | 11,257 | | | 8,550 | | | 2,707 | | | 31.7 | % | | |
| Engineering & systems integration costs, excluding depreciation and amortization | 4,436 | | | 2,237 | | | 2,199 | | | 98.3 | % | | 9,484 | | | 3,367 | | | 6,117 | | | 181.7 | % | | |
| Selling, general and administrative | 17,739 | | | 8,827 | | | 8,912 | | | 101.0 | % | | 40,275 | | | 17,305 | | | 22,970 | | | 132.7 | % | | |
| Research and development | 106 | | | — | | | 106 | | | NM | | 252 | | | 28 | | | 224 | | | 800.0 | % | | |
| Depreciation and amortization | 9,177 | | | 3,537 | | | 5,640 | | | 159.5 | % | | 16,568 | | | 6,301 | | | 10,267 | | | 162.9 | % | | |
| Satellite impairment loss | — | | | 18,407 | | | (18,407) | | | NM | | — | | | 18,407 | | | (18,407) | | | NM | | |
| | | | | | | | | | | | | | | | | |
| Operating loss | (21,706) | | | (29,814) | | | 8,108 | | | 27.2 | % | | (48,838) | | | (39,299) | | | (9,539) | | | (24.3) | % | | |
| | | | | | | | | | | | | | | | | |
| (Loss) gain on derivatives | (4,646) | | | (967) | | | (3,679) | | | (380.5) | % | | 3,494 | | | (14,975) | | | 18,469 | | | 123.3 | % | | |
| Income on equity method investment | 1,213 | | | 767 | | | 446 | | | 58.1 | % | | 1,470 | | | 963 | | | 507 | | | 52.6 | % | | |
| Interest income | 178 | | | — | | | 178 | | | NM | | 178 | | | — | | | 178 | | | NM | | |
| Interest expense | (1,275) | | | (1,270) | | | (5) | | | (0.4) | % | | (2,530) | | | (2,438) | | | (92) | | | (3.8) | % | | |
| Other expense, net | (42) | | | (3,279) | | | 3,237 | | | 98.7 | % | | (40) | | | (147,370) | | | 147,330 | | | 100.0 | % | | |
| Loss before income taxes | (26,278) | | | (34,563) | | | 8,285 | | | 24.0 | % | | (46,266) | | | (203,119) | | | 156,853 | | | 77.2 | % | | |
| Income tax (expense) benefit | — | | | — | | | — | | | — | % | | — | | | — | | | — | | | — | % | | |
| Loss from continuing operations | (26,278) | | | (34,563) | | | 8,285 | | | 24.0 | % | | (46,266) | | | (203,119) | | | 156,853 | | | 77.2 | % | | |
| Discontinued operations: | | | | | | | | | | | | | | | | | |
| Loss from discontinued operations | — | | | (1,022) | | | 1,022 | | | NM | | — | | | (1,022) | | | 1,022 | | | NM | | |
| Income tax (expense) benefit | — | | | — | | | — | | | — | % | | — | | | — | | | — | | | — | % | | |
| Loss from discontinued operations, net of income taxes | — | | | (1,022) | | | 1,022 | | | NM | | — | | | (1,022) | | | 1,022 | | | NM | | |
| Net loss | $ | (26,278) | | | $ | (35,585) | | | $ | 9,307 | | | 26.2 | % | | $ | (46,266) | | | $ | (204,141) | | | $ | 157,875 | | | 77.3 | % | | |
•NM - Fluctuation in terms of percentage change is not meaningful.
Revenue
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, | | $ | | % | | Six Months Ended June 30, | | $ | | % |
| 2022 | | 2021 | | Change | | Change | | 2022 | | 2021 | | Change | | Change |
| (dollars in thousands) |
| Imagery & software analytical revenue | $ | 13,350 | | $ | 5,118 | | $ | 8,232 | | 160.8 | % | | $ | 23,122 | | $ | 11,116 | | $ | 12,006 | | 108.0 | % |
| % of total revenue | 88.4 | % | | 69.5 | % | | | | | | 79.7 | % | | 75.8 | % | | | | |
| | | | | | | | | | | | | | | |
| Engineering & systems integration revenue | 1,752 | | 2,247 | | (495) | | (22.0) | % | | 5,876 | | 3,543 | | 2,333 | | 65.8 | % |
| % of total revenue | 11.6 | % | | 30.5 | % | | | | | | 20.3 | % | | 24.2 | % | | | | |
| | | | | | | | | | | | | | | |
| Total revenue | $ | 15,102 | | $ | 7,365 | | $ | 7,737 | | 105.1 | % | | $ | 28,998 | | $ | 14,659 | | $ | 14,339 | | 97.8 | % |
Imagery and Software Analytical Services Revenue
Imagery and software analytical services revenue significantly increased for the three and six months ended June 30, 2022, as compared to the same period in 2021, primarily driven by increased imagery and monitoring and analytical orders from existing customers and several firm-fixed price subscription contracts with new domestic and international customers. In the three and six months ended June 30, 2022, we were awarded a subscription contract to deliver advanced high frequency imagery services with an initial contract value of $85.8 million, over a five-year base period, with future year options that, if exercised, would increase the contract value to over $1.0 billion and increase the contract term up to ten years. This contract is expected to have a material impact to future revenue. In the three and six months ended June 30, 2022, we were awarded a multi-million dollar contract to provide on-demand satellite monitoring & analytics for an international government, which significantly contributed to the increased revenue in the quarter ended June 30, 2022 compared to the same period in 2021. In addition, monitoring and analytics revenue also increased primarily from fulfillment of renewed firm fixed price contract for economic activity monitoring. Expansion of our constellation after placing seven satellites into orbit in 2021, and the growing capabilities of our constellation also contributed to meeting increased customer demand for imagery, monitoring and analytical orders.
Engineering and Systems Integration Revenue
Engineering and systems integration revenue increased for the six months ended June 30, 2022, as compared to the same period in 2021, primarily due to an increase in the percentage completion of two contracts, driven by achievement of critical design milestones and delivery of major components of the over-allotment optioncontract requirements. Engineering and systems integration revenue decreased for the three months ended June 30, 2022, as compared to the same period in 2021, primarily due to an unfavorable one-time cumulative revenue adjustment of $1.4 million resulting from an increased estimate to complete on critical engineering and equipment costs on two contracts.
Costs and Expenses
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | $ | | % | | Six Months Ended June 30, | | $ | | % |
| | 2022 | | 2021 | | Change | | Change | | 2022 | | 2021 | | Change | | Change |
| | (dollars in thousands) |
| Imagery & software analytical service costs, excluding depreciation and amortization | | $ | 5,350 | | $ | 4,171 | | $ | 1,179 | | 28.3 | % | | $ | 11,257 | | $ | 8,550 | | $ | 2,707 | | 31.7 | % |
| Engineering & systems integration costs, excluding depreciation and amortization | | 4,436 | | 2,237 | | 2,199 | | 98.3 | % | | 9,484 | | 3,367 | | 6,117 | | 181.7 | % |
| Total costs | | $ | 9,786 | | $ | 6,408 | | $ | 3,378 | | 52.7 | % | | $ | 20,741 | | $ | 11,917 | | $ | 8,824 | | 74.0 | % |
Imagery and Software Analytical Service Costs
Imagery and software analytical service costs increased for the three and six months ended June 30, 2022, as compared to the same period in 2021, primarily driven by data sourced from different sensors such as synthetic aperture radar, third-party service costs such as, increased hosting costs due to increased data volumes and maintaining the growth of our satellite and ground stations networks, and third-party subcontractor costs to meet specific needs of new customer programs. Additionally, we recorded $0.3 million and $1.1 million, respectively, of stock-based compensation expense during the three and six months ended June 30, 2022 primarily related to vesting of restricted stock units ("RSUs") triggered by the successful completion of the Merger.
Engineering and Systems Integration Costs
Engineering and systems integration costs increased for the three and six months ended June 30, 2022, as compared to the same period in 2021, primarily attributable to non-recurring engineering design costs and material procurement costs incurred for customer contracts associated with the Gen-3 satellites. The increase was also due to an increase in the estimate to complete on two contracts, which, given the accounting treatment for customer supported projects, immediately increased engineering and systems integration costs by $4.6 million for the six months ended June 30, 2022 as compared to the prior period. For the three and six months ended June 30, 2022, excluding the immediate forward loss related to these projects of $2.7 million and $3.7 million, respectively, engineering and systems integration costs would have been $1.7 million and $5.8 million, respectively.
Selling, General, and Administrative
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | $ | | % | | Six Months Ended June 30, | | $ | | % | | | | | | | | | | |
| | 2022 | | 2021 | | Change | | Change | | 2022 | | 2021 | | Change | | Change | | | | | | | | | | |
| | (dollars in thousands) | | | | | | | | | | |
| Stock-based compensation expense | | $ | 2,637 | | | $ | 264 | | | $ | 2,373 | | | 898.9 | % | | $ | 11,956 | | | $ | 772 | | | $ | 11,184 | | | NM | | | | | | | | | | |
| Salaries and benefit costs | | 8,705 | | | 5,219 | | | 3,486 | | | 66.8 | % | | 16,606 | | | 9,920 | | | 6,686 | | | 67.4 | % | | | | | | | | | | |
| Development costs | | 235 | | | 160 | | | 75 | | | 46.9 | % | | 253 | | | 314 | | | (61) | | | (19.4) | % | | | | | | | | | | |
| Professional fees | | 1,201 | | | 1,060 | | | 141 | | | 13.3 | % | | 2,519 | | | 2,230 | | | 289 | | | 13.0 | % | | | | | | | | | | |
| Information technology, recruiting, and other administrative expenses | | 941 | | | 727 | | | 214 | | | 29.4 | % | | 2,615 | | | 1,732 | | | 883 | | | 51.0 | % | | | | | | | | | | |
| Selling and marketing | | 2,105 | | | 857 | | | 1,248 | | | 145.6 | % | | 2,619 | | | 1,239 | | | 1,380 | | | 111.4 | % | | | | | | | | | | |
| Rent expense | | 670 | | | 488 | | | 182 | | | 37.3 | % | | 1,224 | | | 994 | | | 230 | | | 23.1 | % | | | | | | | | | | |
| Insurance | | 1,245 | | | 52 | | | 1,193 | | | NM | | 2,483 | | | 104 | | | 2,379 | | | NM | | | | | | | | | | |
| Selling, general and administrative | | $ | 17,739 | | | $ | 8,827 | | | $ | 8,912 | | | 101.0 | % | | $ | 40,275 | | | $ | 17,305 | | | $ | 22,970 | | | 132.7 | % | | | | | | | | | | |
•NM - Fluctuation in terms of percentage change is not meaningful.
Selling, general, and administrative expense increased during the three and six months ended June 30, 2022, as compared to the same periods in 2021, primarily driven by several factors. For the six months ended June 30, 2022 as compared to the six months ended June 30, 2021, stock-based compensation expense increased approximately $11.2 million related to vesting of RSUs, of which a significant portion vested 180 days following the closing of the Merger. Salaries and payroll-related benefits increased significantly due to headcount growth in software engineers, executive and administrative functions. In addition, our public company insurance costs increased as a result of the Merger. For the three months ended June 30, 2022 as compared to the same period in 2021, stock-based compensation expense increased approximately $2.4 million from the prior year related to the vesting of RSUs, of which a significant portion was not recognized until the third quarter of 2021 when the Merger was completed.
The following is our forecast for total RSU expense as of June 30, 2022, which, in addition to the amounts recognized in selling, general, and administrative expenses, includes the portion that will be capitalized or classified in imagery and software analytical service costs and engineering and systems integration costs:
| | | | | |
| (in thousands) |
| For the remainder of 2022 | $ | 6,377 | |
| For the years ending December 31, | |
| 2023 | 7,266 | |
| 2024 | 3,085 | |
| 2025 | 2,016 | |
| 2026 | 164 | |
| $ | 18,908 | |
Research and Development
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | $ | | % | | Six Months Ended June 30, | | $ | | % |
| | 2022 | | 2021 | | Change | | Change | | 2022 | | 2021 | | Change | | Change |
| | (dollars in thousands) |
| Research and development | | $ | 106 | | | $ | — | | | $ | 106 | | | NM | | $ | 252 | | | $ | 28 | | | $ | 224 | | | 800.0 | % |
•NM - Fluctuation in terms of percentage change is not meaningful.
Research and development expense increased for the three and six months ended June 30, 2022 as compared to the same periods in 2021. Much of our ongoing development efforts are either charged to engineering and systems integration costs or development costs in selling, general and administrative expenses, The increase was driven by contracting third-party vendors who fulfill our unique and strategic projects as research and development expense.
Depreciation and Amortization
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | $ | | % | | Six Months Ended June 30, | | $ | | % |
| | 2022 | | 2021 | | Change | | Change | | 2022 | | 2021 | | Change | | Change |
| | (dollars in thousands) |
| Depreciation of satellites | | $ | 8,666 | | | $ | 3,066 | | | $ | 5,600 | | | 182.6 | % | | $ | 15,768 | | | $ | 5,378 | | | $ | 10,390 | | | 193.2 | % |
| Depreciation of all other property and equipment | | 371 | | | 129 | | | 242 | | | 187.6 | % | | 519 | | | 243 | | | 276 | | | 113.6 | % |
| Amortization | | 140 | | | 342 | | | (202) | | | (59.1) | % | | 281 | | | 680 | | | (399) | | | (58.7) | % |
| Depreciation and amortization | | $ | 9,177 | | | $ | 3,537 | | | $ | 5,640 | | | 159.5 | % | | $ | 16,568 | | | $ | 6,301 | | | $ | 10,267 | | | 162.9 | % |
Depreciation expense from satellites increased for the three and six months ended June 30, 2022 as compared to the same periods in 2021. The increases were driven by six satellites placed in service in the second half of 2021 and two satellites placed in service in the first half of 2022.
Depreciation expense from all other property and equipment increased for the three and six months ended June 30, 2022, as compared to the same periods in 2021, primarily driven by capitalization of software in 2022 and additional computer equipment that was placed into service.
Amortization expense decreased for the three and six months ended June 30, 2022, as compared to the same periods in 2021, primarily as a result of in-process research and development from a prior acquisition being fully amortized in 2021.
Satellite Impairment Loss
We recorded a satellite impairment loss for the three and six months ended June 30, 2021 resulting from the loss of two of our satellites, which occurred on May 15, 2021 when a rocket carrying those satellites suffered a failure during flight. This resulted in an impairment loss of $18.4 million, the full carrying value of the satellites, recorded to earnings during the three and six months ended June 30, 2021. The $18.4 million loss included satellite procurement, launch, shipping, launch support, and other associated costs. There were no satellite impairment losses in the three and six months ended June 30, 2022.
Non-Operating Expenses
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Three Months Ended June 30, | | $ | | % | | Six Months Ended June 30, | | $ | | % |
| | 2022 | | 2021 | | Change | | Change | | 2022 | | 2021 | | Change | | Change |
| | (dollars in thousands) |
| | | | | | | | | | | | | | | | |
| (Loss) gain on derivatives | | $ | (4,646) | | | $ | (967) | | | $ | (3,679) | | | (380.5) | % | | $ | 3,494 | | | $ | (14,975) | | | $ | 18,469 | | | 123.3 | % |
| Income on equity method investment | | 1,213 | | | 767 | | | 446 | | | 58.1 | % | | 1,470 | | | 963 | | | 507 | | | 52.6 | % |
| Interest income | | 178 | | | — | | | 178 | | | NM | | 178 | | | — | | | 178 | | | NM |
| Interest expense | | (1,275) | | | (1,270) | | | (5) | | | (0.4) | % | | (2,530) | | | (2,438) | | | (92) | | | (3.8) | % |
| Other expense, net | | (42) | | | (3,279) | | | 3,237 | | | 98.7 | % | | (40) | | | (147,370) | | | 147,330 | | | 100.0 | % |
•NM - Fluctuation in terms of percentage change is not meaningful.
(Loss) gain on derivatives
Fluctuations in our equity warrants and other equity instruments that we classify as derivative liabilities and measure at fair value are significantly driven by our common stock price; these instruments generated a loss during the three months ended June 30, 2022 and a gain during the six months ended June 30, 2022.
During the three and six months ended June 30, 2021, we recorded losses on derivative liabilities related to the fluctuation of fair value of outstanding warrants to purchase Legacy BlackSky stock and consent fees related to the Intelsat and Seahawk secured term loan.
Income on equity method investment
The fluctuations in earnings from our equity method investment is directly related to the operating performance of our joint venture LeoStella and was consistent year over year.
Interest income
Interest income increased during the three and six months ended June 30, 2022 as a result of our short-term investments purchased in 2022.
Interest expense
Interest expense was consistent year over year.
Other expense, net
Other expenses were significantly higher during the three and six months ended June 30, 2021 as compared to the same periods in 2022, primarily due to an initial loss of $99.7 million upon issuances of the Bridge Notes and Bridge Notes Rights Offering executed in the first half of 2021 as the fair value of these notes and the saleaccompanying Legacy BlackSky common shares and Class A common stock warrants that were granted to certain investors was in excess of the Private Placement Warrants, a total of $316,250,000 was placedproceeds received.
We also incurred $47.7 million in
the Trust Account and we had $1,126,709 of cash held outside of the Trust Account, after payment ofdebt issuance costs related to the
Initial Public Offering,Bridge Notes and
available for working capital purposes.the modification of existing debt arrangements. We
incurred $18,047,876expensed the debt issuance costs because the Bridge Notes were carried in
transaction costs, including $6,325,000 of underwriting fees, $11,068,750 of deferred underwriting fees, and $654,126 of other costs.We intend to use substantially allthe unaudited condensed consolidated balance sheets at fair value. Upon consummation of the funds heldMerger, the Bridge Notes and associated warrant liabilities were converted to equity and extinguished. We do not expect similar charges in future periods.
Included in other expense, net for the Trust Account, including any amounts representingthree and six months ended June 30, 2022 is the forgiveness of a non-trade receivable of $75.0 thousand related to payroll taxes.
Non-GAAP Financial Measures
In addition to our results determined in accordance with GAAP, management utilizes certain non-GAAP performance measures, Adjusted EBITDA, and free cash flow for purposes of evaluating our ongoing operations
and for internal planning and forecasting purposes. Our management and board of directors believe that these non-GAAP operating measures, when reviewed collectively with our GAAP financial information, provide useful supplemental information to investors in assessing our operating performance.
Adjusted EBITDA
Adjusted EBITDA is defined as net income or loss attributable to us before interest
earned on the Trust Account (less income,
taxes payable), to completeinterest expense, income tax expense or benefit, depreciation and amortization, as well as significant non-cash and/or non-recurring expenses as our
Business Combination. To the extent thatmanagement believes these items are not useful in evaluating our
capital stock or debt is used, in whole or in part, as consideration to complete our 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.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, and structure, negotiate and complete a Business Combination.
In order to fund working capital deficiencies or finance transaction costs in connection with a Business Combination, the Sponsor, an affiliate of the Sponsor, or our officers and directors may,core operating performance. These items include, but are not obligatedlimited to, loan us fundsrealized loss on conversion of Bridge Notes, stock-based compensation expense, unrealized (gain) loss on certain warrants/shares classified as mayderivative liabilities, satellite impairment loss, (gain) loss on debt extinguishment, loss from discontinued operations, net of income taxes, severance, income on equity method investment, transaction-related legal settlements, and transaction costs associated with equity instruments accounted for as derivative liabilities. We have presented Adjusted EBITDA because it is a key measure used by our management and board of directors to understand and evaluate our operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. In particular, we believe that the exclusion of certain items in calculating Adjusted EBITDA can produce a useful measure for period-to-period comparisons of our business. Accordingly, we believe that Adjusted EBITDA provides useful information in understanding and evaluating our operating results. In addition, we believe that Adjusted EBITDA provides additional information for investors to use in evaluating our ongoing operating results and trends. This non-GAAP measure provides investors with incremental information for the evaluation of our performance after isolation of certain items deemed unrelated to our core business operations.
Adjusted EBITDA is presented as a supplemental measure to our GAAP measures of performance. When evaluating Adjusted EBITDA, you should be required. If we complete a Business Combination, we would repay such loaned amounts. In the eventaware that a Business Combination does not close, we may use a portionincur future expenses similar to those excluded when calculating this measure. In addition, our presentation of this measure should not be construed as an inference that our future results will be unaffected by unusual or non-recurring items. Furthermore, our computation of Adjusted EBITDA may not be directly comparable to similarly titled measures computed by other companies, as the nature of the adjustments that other companies may include or exclude when calculating Adjusted EBITDA may differ from the adjustments reflected in our measure. Because of these limitations, Adjusted EBITDA should not be considered in isolation, nor should this measure be viewed as a substitute for the most directly comparable GAAP measure, which is net loss. We compensate for the limitations of non-GAAP measures by relying primarily on our GAAP results. You should review the reconciliation of our net loss to Adjusted EBITDA below and not rely on any single financial measure to evaluate our performance.
The table below reconciles our net loss to Adjusted EBITDA for the three and six months ended June 30, 2022 and 2021:
| | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended June 30, 2021 | | Six Months Ended June 30, | |
| 2022 | | 2021 | | 2022 | | 2021 | |
| (in thousands) | |
| Net loss | $ | (26,278) | | | $ | (35,585) | | | $ | (46,266) | | | $ | (204,141) | | |
| Interest income | (178) | | | — | | | (178) | | | — | | |
| Interest expense | 1,275 | | | 1,270 | | | 2,530 | | | 2,438 | | |
| Depreciation and amortization | 9,177 | | | 3,537 | | | 16,568 | | | 6,301 | | |
| Loss on issuance of Bridge Notes, including debt issuance costs expensed for debt carried at fair value | — | | | 3,288 | | | — | | | 147,387 | | |
| Stock-based compensation expense | 2,986 | | | 264 | | | 13,226 | | | 772 | | |
| Loss (gain) on derivatives | 4,646 | | | 967 | | | (3,494) | | | 14,975 | | |
| Satellite impairment loss | — | | | 18,407 | | | — | | | 18,407 | | |
| Loss from discontinued operations, net of income taxes | — | | | 1,022 | | | — | | | 1,022 | | |
| Severance | 705 | | | — | | | 705 | | | — | | |
| Income on equity method investment | (1,213) | | | (767) | | | (1,470) | | | (963) | | |
| Forgiveness of non-trade receivable | 75 | | | — | | | 75 | | | — | | |
| Adjusted EBITDA | $ | (8,805) | | | $ | (7,597) | | | $ | (18,304) | | | $ | (13,802) | | |
Free Cash Flow
We define free cash flow as cash flows used in, or provided by, operating activities—continuing operations plus cash flows used in, or provided by, operating activities—discontinued operations less purchase of property and equipment and satellite procurement work in process. We have presented free cash flow because it is used by our management and board of directors as an indicator of the amount of cash we generate or use and to evaluate our ability to satisfy current and future obligations and to fund future business opportunities. Accordingly, we believe that free cash flow provides useful information to investors and others, enhancing the overall understanding of our ability to satisfy our financial obligations and pursue business opportunities, and allowing for greater transparency with respect to a key financial metric used by our management in their financial and operational decision-making.
Free cash flow is not defined by GAAP and should not be considered in isolation of, or as an alternative to, measures prepared in accordance with GAAP. There are a number of limitations related to the use of free cash flow rather than net cash from (used in) operating activities, which is the most directly comparable GAAP equivalent. Some of these limitations are:
•free cash flow is not a measure of cash available for discretionary expenditures since we have certain non-discretionary obligations such as debt repayments or capital lease obligations that are not deducted from the measure; and
•other companies, including companies in our industry, may calculate free cash flow differently, which reduces its usefulness as a comparative measure.
The table below reconciles our net cash used in operating activities to free cash flow for the six months ended June 30, 2022 and 2021:
| | | | | | | | | | | |
| Six Months Ended June 30, 2022 |
| 2022 | | 2021 |
| (in thousands) |
| Net cash used in operating activities | $ | (27,789) | | | $ | (21,112) | |
| Purchase of property and equipment | (5,289) | | | (207) | |
| Satellite procurement work in process | (20,208) | | | (11,205) | |
| Free cash flow | $ | (53,286) | | | $ | (32,524) | |
| | | |
| Net cash used in investing activities | $ | (68,958) | | | $ | (11,419) | |
| Net cash (used in) provided by financing activities | (4,012) | | | 53,817 | |
Liquidity and Capital Resources
As of June 30, 2022, our existing sources of liquidity included cash and cash equivalents and short-term investments. Our cash and cash equivalents excluding restricted cash totaled $64.8 million and $165.6 million as of June 30, 2022 and December 31, 2021, respectively, and our short-term investments totaled $43.8 million and $0 as of June 30, 2022 and December 31, 2021, respectively. We have incurred losses and generated negative cash flows from operations since our inception in September 2014. As of June 30, 2022, we had an accumulated deficit of $517.2 million.
Our short-term liquidity as of June 30, 2022 was comprised of the following:
| | | | | |
| (in thousands) |
| Cash and cash equivalents | $ | 64,827 | |
Restricted cash(1) | 2,518 |
Short-term investments(2) | 43,833 |
| $ | 111,178 | |
(1) Restricted cash expires by March 31, 2023.(2) Short-term investments are included in cash flows from investing activities in the unaudited condensed consolidated statements of cash flows.
We expect cash and cash equivalents and cash generated from operating activities to be sufficient to meet our working capital held outsideand capital expenditure needs for the Trust Accountforeseeable future. Our future long-term capital requirements will depend on many factors including our growth rate, the timing and extent of spending to repay such loaned amounts but no proceeds fromsupport solution development efforts, the expansion of sales and marketing activities, the ongoing investments in technology infrastructure, the introduction of new and enhanced solutions, and the continuing market acceptance of our Trust Account would be used for such repayment. Upsolutions. From time to $1,500,000 of such loanstime, we may be convertible into warrants identicalseek additional equity or debt financing to the Private Placement Warrants, at a price of $1.00 per warrant at the option of the lender.
fund capital expenditures, strategic initiatives or investments and our ongoing operations. We do not believehave a line of credit or access to immediate funds and we will needare not subject to any financial or minimum cash metrics. If we decide, or are required, to seek additional financing from outside sources, we may not be able to raise additional funds in orderit on terms acceptable to meet the expenditures required for operating our business. However, if our estimate of the costs of identifying a target business, undertakingin-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 Business Combination. Moreover, we may need to obtain additional financing either to complete our Business Combinationus or because we become obligated to redeem a significant number of our public shares upon consummation of our Business Combination, in which case we may issue additional securities or incur debt in connection with such Business Combination. Subject to compliance with applicable securities laws, we would only complete such financing simultaneously with the completion of our Business Combination.at all. If we are unable to completeraise additional capital when desired, our Business Combination becausebusiness, financial condition and results of operations could be adversely affected.
Funding Requirements
We expect our expenses to increase as we do not have sufficient funds availablecontinue to us, weinvest in sales, marketing and products to increase our market share. We will be forced to cease operations and liquidate the Trust Account. In addition, following our Business Combination, if cash on hand is insufficient, we may need to obtain additional financing in order to meet our obligations.Off-Balance Sheet Arrangements
We did not have anyoff-balance sheet arrangements as of September 30, 2019.
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 an affiliate of the Sponsor a monthly fee of $10,000 for office space, utilities and secretarial and administrative support to the Company. We began incurring these fees on November 5, 2019 and willalso continue to incur these fees monthly untilcapital expenditures as we procure and launch satellites to increase image collection capacity, as well as investing in our Gen-3 satellites and
Spectra AI software platform to significantly expand our product capabilities in the earlierfuture.
Short-term liquidity requirements
As of June 30, 2022, our current assets were approximately $124.4 million, consisting primarily of cash and cash equivalents, restricted cash, short-term investments, trade receivables, prepaid expenses and other current assets, and contract assets.
As of June 30, 2022, our current liabilities were approximately $23.2 million, consisting primarily of accounts payable and accrued liabilities, contract liabilities, and other non-recurring current liabilities. Accordingly, we have sufficient cash and working capital to fund our short-term liquidity requirements.
Long-Term Liquidity Requirements
We anticipate that our most significant long-term liquidity and capital needs will relate to continued funding of operations, satellite development capital expenditures, launch capital expenditures, and ongoing investments in our Spectra AI platform and internal infrastructure that will enable us to scale the completionbusiness efficiently and securely. We believe our current cash position, as well as a growing customer backlog, will be sufficient to cover forecasted capital needs and operating expenditures for the foreseeable future. Macroeconomic conditions and credit markets could also impact the availability and, or, the cost of potential future debt or equity financing.
Cash Flow Analysis
The following table provides a summary of cash flow data for the Business Combinationsix months ended June 30, 2022 and 2021:
| | | | | | | | | | | | | | | | | |
| Six Months Ended June 30, | | $ |
| 2022 | | 2021 | | Change |
| (in thousands) |
| Net cash used in operating activities | $ | (27,789) | | | $ | (21,112) | | | $ | (6,677) | |
Net cash used in investing activities(1) | (68,958) | | | (11,419) | | | (57,539) | |
| Net cash (used in) provided by financing activities | (4,012) | | | 53,817 | | | (57,829) | |
| Net (decrease) increase in cash, cash equivalents, and restricted cash | (100,759) | | | 21,286 | | | (122,045) | |
| Cash, cash equivalents, and restricted cash – beginning of year | 168,104 | | | 10,573 | | | 157,531 | |
| Cash, cash equivalents, and restricted cash – end of period | $ | 67,345 | | | $ | 31,859 | | | $ | 35,486 | |
(1) Includes purchase of $43.8 million of short-term investments not categorized as cash
Operating activities
For the six months ended June 30, 2022, net cash used in operating activities was approximately $27.8 million. The contributor to the increase in cash used during the six months ended June 30, 2022 was the operating loss, adjusted for depreciation, amortization and stock-based compensation expense in the six months ended June 30, 2022 as compared to the six months ended June 30, 2021. The operating loss increase in the six months ended June 30, 2022 was primarily due to increased salaries and payroll-related benefits for headcount growth across the organization.
Investing activities
We continue to have significant cash outflows for satellite procurement and launch related services. In the six months ended June 30, 2022, net cash used in investing activities increased approximately $57.5 million, of which $43.8 million is the result of our investment in corporate debt and governmental securities, and the Company’s liquidation.remainder is primarily cash paid for the procurement of satellites and other launch-related costs. We continue to fund the acquisition of property and equipment, which includes the internally developed capitalized software, as we add innovative new services and tools to our Spectra AI software platform.
Financing activities
The most significant impact in the change in cash flows from financing activities in the six months ended June 30, 2022 as compared to the six months ended June 30, 2021 was related to the $58.6 million loan proceeds from the Bridge Notes in the prior year.
Critical Accounting Policies
and Estimates
The preparation of our unaudited condensed consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States of Americanotes requires management to make judgments, estimates, and assumptions that affect the reported amounts of assets, liabilities, revenue, and liabilities, disclosureexpenses. Management has based its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of contingentwhich form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
For a description of our significant accounting policies see Note 2—“Basis of Presentation and Summary of Significant Accounting Policies,” of the notes to the unaudited condensed consolidated financial statements. An accounting policy is considered to be critical if it requires an accounting estimate to be made based on assumptions about matters that are highly uncertain at the time the estimate is made, and if different estimates that reasonably could have been used, or changes in the accounting estimates that are reasonably likely to occur periodically, could materially impact the unaudited condensed consolidated financial statements. Management believes the following critical accounting policies reflect the more significant estimates and assumptions used in the preparation of our unaudited condensed consolidated financial statements.
Revenue Recognition
The recognition and measurement of revenue requires the use of judgments and estimates. Specifically, judgment is used in interpreting complex arrangements with nonstandard terms and conditions and determining when all criteria for revenue recognition have been met.
We primarily generate revenue from the sale of imagery, data, software, and analytics, including professional services, and engineering and systems integration from long-term construction contracts.
Identifying the performance obligations contained in a contract, determining transaction price, allocating transaction price, and determining when performance obligations are satisfied can require the application of significant judgment, as further discussed below.
Identifying the performance obligations in a contract
We execute contracts for a single promise or multiple promises. Specifically, our firm fixed price contracts typically include multiple promises which are accounted for as separate performance obligations. Significant judgment is required in determining performance obligations, and these decisions could change the amount of revenue and profit or loss recorded in each period.
Classification of Revenue
We classify revenue as imagery and software analytical services, and engineering and systems integration in our unaudited condensed consolidated statements of operations and comprehensive loss based on the predominant attributes of the performance obligations.
Determination of and Allocation of Transaction Price
Each customer purchase order sets forth the transaction price for the products and services purchased under the arrangement. For contracts with multiple performance obligations, we evaluate whether the stated selling prices for the products or services represent their standalone selling prices. When it is necessary to allocate the transaction price to multiple performance obligations, management typically uses the expected cost plus a reasonable profit margin to estimate the standalone selling price of each product or service. We also sell standard products or services with observable standalone revenue transactions. In these situations, the observable standalone revenue transactions are used to determine the standalone selling price.
Determination of when Performance Obligations are Satisfied
Imagery revenue is recognized at the point-in-time the customer receives access to the imagery, or ratably over the subscription period. In certain firm fixed price contracts that contain imagery where it is probable we will receive the full contract amount or the customer prepays for future services which may expire unused, our accounting policy for unexercised performance obligations is to recognize the estimated unused amount as revenue over time in proportion to the historical pattern of rights exercised by the customer. The unrecognized amount is recorded within contract liabilities on our unaudited condensed consolidated balance sheets. Software analytical services revenue derived from data, software, and analytics, including professional service solutions, is recognized from the rendering of services over time on a cost-plus-fixed-fee, firm fixed price, or a time and materials basis, or at the point-in-time the customer receives access to an analytic product. Engineering & systems integration revenue is primarily generated from fixed price long-term engineering and integration construction contracts. Due to the long-term nature of these contracts, we generally recognize revenue over time using a cost-to-cost measure of progress because it best depicts the transfer of control to the customer as we incur costs on the contracts. Under the percentage-of-completion cost-to-cost measure of progress, the extent of progress towards completion is measured based on the ratio of costs incurred to date to the total estimated costs to complete the performance obligation(s). The estimation of total estimated costs at completion is subject to many variables and requires judgment. We recognize changes in contract estimates on a cumulative catch-up basis in the period in which the changes are identified. Such changes in contract estimates can result in the recognition of revenue in a current period for performance obligations which were satisfied or partially satisfied in a prior period. If at any time, the estimate of contract profitability indicates a probable anticipated loss on the contract, we recognize the total loss as and when known.
Equity Valuations
As there was not a market for Legacy BlackSky equity, valuations of Legacy BlackSky equity instruments required the application of significant estimates, assumptions, and judgments. These valuations impacted various amounts and accounting conclusions reflected in our unaudited condensed consolidated financial statements, inclusive of the recognition of equity-based compensation, debt discounts when debt issuances were accompanied by the issuance of equity (e.g., warrants), and the evaluation of whether beneficial conversion features existed within our convertible financial instruments. The following discussion provides additional details regarding the significant estimates, assumptions, and judgments that impacted the determination of the fair values of equity-based compensation awards, warrants, and the preferred stock and common stock that comprised our capital structure prior to the Merger. The following discussion also explains why these estimates, assumptions, and judgments could be subject to uncertainties and future variability.
Equity-Based Compensation
Legacy BlackSky issued equity and equity-based awards under our 2014 Plan and the 2011 Plan. Awards issued as of the year ended December 31, 2020 include stock options and restricted stock awards (“RSAs”). Subsequent to December 31, 2020, we also issued RSUs. Awards under these Plans were approved by the board of directors, and awards that have been canceled, forfeited, or expired are available for issuance in connection with BlackSky's 2021 Equity Incentive Plan.
For purposes of recognizing equity-based compensation related to RSAs, RSUs, and stock options granted to employees, management estimates the grant date fair values of such awards to measure the costs to be recognized for services received. For awards with time-based vesting conditions, we recognize compensation costs based upon the straight-line amortization of the grant date fair value of the awards over the requisite service period. When equity-based compensation awards include a performance condition, no compensation is recognized until the performance condition is deemed probable to occur; we then recognize compensation costs based on the accelerated attribution method, which accounts for awards with discrete vesting dates as if they were a separate award.
We now estimate the grant date fair value of RSAs and RSUs based upon the trading price of our Class A common stock. Our historical approach to estimating the fair value of Legacy BlackSky’s Class A common stock is subsequently described in the discussion of “Preferred Stock and Common Stock Valuations.” We estimated the fair value of Legacy BlackSky's stock options using the Black-Scholes option-pricing model, as subsequently described.
Stock Option and Class A Common Stock Warrant Valuations
Legacy BlackSky used the Black-Scholes option-pricing model to value all options and Class A common stock warrants. Estimating the fair value of stock options using the Black-Scholes option-pricing model requires the application of significant assumptions, such as the fair value of our Class A common stock, the estimated term of the options, risk-free interest rates, the expected volatility of the price of our Class A common stock, and an expected dividend yield. Each of these assumptions is subjective, requires significant judgement, and is based upon management’s best estimates. If any of these assumptions were to change significantly in the future, equity-based compensation related to future awards may differ significantly, as compared with awards previously granted.
We have largely moved towards granting RSAs and RSUs to certain employees. We use the following inputs under Black-Scholes as follows:
Fair Value of Class A Common Stock—Refer to the subsequent discussion of “Preferred Stock and Common Stock Valuation” for a detailed discussion of the valuation techniques and assumptions applied to value the Class A common stock prior to the Merger. Subsequent to the Merger, our Class A common stock has been valued based upon our trading price.
Expected Dividend Yield—The Black-Scholes valuation model requires an expected dividend yield as an input. The dividend yield is based on historical experience and expected future changes. We currently have no plans to pay dividends on our Class A common stock and, accordingly, have assumed no dividend yield upon valuation of our stock options.
Expected Volatility—As there was no observable volatility with respect to our Legacy BlackSky Class A common stock, the expected volatility of our Legacy BlackSky and BlackSky Class A common stock was estimated based upon the historical share price volatility of guideline comparable companies.
Risk-free Interest Rate—The yield on actively traded, non-inflation indexed U.S. Treasury notes was used to extrapolate an average risk-free interest rate based on the expected term of the underlying grants.
Expected Term—For options granted in 2021, since there is not a history of option exercises as a public company, we considered the option vesting terms and contractual period, as well as the demographics of the holders, in estimating the expected term. For options granted prior to 2021, the expected term was the estimated duration to a liquidation event based on a weighted average consideration of the most likely exit prospects for that stage of development. Legacy BlackSky was privately funded and, accordingly, the lack of marketability was factored into the expected term of options granted. We will continue to review our estimate in the future and adjust it, if necessary, due to changes in our historical exercises.
Private Placement Warrants and Sponsor Earn-Out Shares
We classify the Private Placement Warrants and Sponsor Earn-Out Shares as long-term liabilities in our unaudited condensed consolidated balance sheets as of June 30, 2022. Each liability was initially recorded at fair value on the date of the Merger. The Private Placement Warrants are recorded at fair value using a Black-Scholes option pricing model and the Sponsor Earn-Out Shares are recorded at fair value using a Monte Carlo simulation model. These liabilities are re-measured to fair value at each subsequent reporting date and recorded to (loss) gain on derivatives on our unaudited condensed consolidated statements of operations and comprehensive loss. We will continue to adjust the liability for changes in fair value until the financial statements,instruments are exercised, redeemed, cancelled or released.
The fair value models require inputs including, but not limited to, the fair value of our Class A common stock, the risk-free interest rate, expected term, expected dividend yield and
income and expenses duringexpected volatility. The fair value of our Class A common stock is the
periods reported. Actual results could materially differ from those estimates.closing stock price on the NYSE as of the measurement date. The risk-free interest rate assumption is determined by using U.S. Treasury rates for the same period as the expected terms of the financial instruments. The dividend yield assumption is based on the dividends expected to be paid over the expected life of the financial instruments. We have
not identified any critical accounting policies.Recent accounting standards
Management does not believe that any recently issued, but not yet effective, accounting pronouncements, if currently adopted, would havehistorically been a material effectprivate company and lacked sufficient company-specific historical and implied volatility information. Therefore, the expected stock volatility is based on our condensed financial statements.
the historical volatility of a publicly traded set of peer companies. Changes in these assumptions can materially affect the estimate of the fair value of these instruments and ultimately the change in fair value.
ItemITEM 3.
Quantitative and Qualitative Disclosures About Market RiskAs of September 30, 2019, we were not subject to any market or interest rate risk. Following the consummation of our Initial Public Offering, the net proceeds of our Initial Public Offering, including amounts in the Trust Account, have been invested in U.S. government treasury bills, notes or bonds with a maturity of 185 days or less or in certain money market funds that invest solely in U.S. treasuries. Due to the short-term nature of these investments, we believe there will be no associated material exposure to interest rate risk.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
ItemITEM 4.
Controls and ProceduresCONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Disclosure controls
andare procedures
that are designed
to ensurewith the objective of ensuring that information required to be disclosed
by us in our
reports filed under the Exchange Act,
reportssuch as this Quarterly Report on Form 10-Q, is recorded, processed, summarized, and reported within the time
periodsperiod specified in the SEC’s rules and
forms, andforms. Disclosure controls are also designed with the objective of reasonably ensuring that such information is accumulated and communicated to our management, including
our principalthe chief executive officer and
principalchief financial officer,
or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Under the supervision and Our management evaluated, with the participation of our management, including our principal executive officerChief Executive Officer and principal financial and accounting officer, we conducted an evaluation ofChief Financial Officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended September 30, 2019, as such term is(as defined in Rules13a-15(e) and15d-15(e) under the Exchange Act.Act) as of June 30, 2022. Based on thisupon that evaluation, our principal executive officer and principal financial and accounting officer haveCertifying Officers concluded that, during the period covered by this report,as of June 30, 2022, our disclosure controls and procedures were effective at a reasonable assurance levellevel.
In designing and accordingly, providedevaluating the disclosure controls and procedures, management recognized that controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that the information requiredmisstatements due to be disclosed by us in reports filed under the Exchange Act is recorded, processed, summarizederror or fraud will not occur or that all control issues and reportedinstances of fraud, if any, within the time periods specified in the SEC’s rules and forms.Company will be detected.
Changes in Internal Control
overOver Financial Reporting
There was no change in our internal control over financial reporting,
that occurred(as defined in Rules 13a-15(d) or 15d-15(d) under the Exchange Act) during the
fiscal quarter
of 2019 covered by this Quarterly Report on Form10-Qended June 30, 2022 that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
From time to time, we may be involved in claims and proceedings arising in the ordinary course of our business. The outcome of any such claims or proceedings, regardless of the merits, is inherently uncertain.
For a discussion of legal proceedings in which we are involved, see Note 17 to the financial statements and supplementary data included in Part I, Item
1. Legal Proceedings.None.
I of this Quarterly Report on Form 10-Q.
ItemITEM 1A.
Risk Factors.Factors that could causeRISK FACTORS
For risk factors relating to our actual resultsbusiness, please refer to differ materially from those in this Quarterly Report are any of the risks describedsection entitled “Risk Factors” in our Registration StatementForm 10-K for the year ended December 31, 2021 and filed by us with the SEC.SEC on March 31, 2022. Any of thesethose factors could result in a significant or material adverse effect on our results of operations or financial condition. Additional risk factors not presently known to us or that we currently deem immaterial may also impair our business or results of operations. As of the date of this Quarterly Report, there have been no materialWe may disclose changes to the risksuch factors disclosedor disclose additional factors from time to time in our Registration Statement filedfuture filings with the SEC.
ItemITEM 2.
Unregistered Sales of Equity Securities and Use of Proceeds.In June 2018, the Sponsor purchased 125,000 shares of the Company’s Class B common stock for an aggregate price of $25,000. In September 2018, the Company effectuated a69-for-1 forward stock split of its Class B common stock, resulting in an aggregate of 8,625,000 Founder Shares outstanding, of which an aggregate of up to 1,125,000 shares were subject to forfeiture to the extent the underwriters’ over-allotment option was not exercised in full or in part. As adjusted for the 1.1 for 1 stock dividend in October 2019 (see below), such amounts totaled 9,487,500 Founder Shares outstanding, of which 1,237,500 shares were subject to forfeiture. In April 2019, the Sponsor contributed back to the Company, for no consideration, 1,581,250 Founder Shares (as adjusted for the 1.1 for 1 stock dividend in October 2019) Founder Shares, resulting in an aggregate of 7,187,500 Founder Shares outstanding, of which an aggregate of up to 937,500 shares were subject to forfeiture. In October 2019, the Company effected a 1.1 for 1 stock dividend for each share of Class B common stock outstanding, resulting in an aggregate of 7,906,250 Founder Shares outstanding. The foregoing issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
On November 5, 2019, the Company consummated the Initial Public Offering of 27,500,000 units, at $10.00 per Unit, generating gross proceeds of $275,000,000. The securities issued in the offering were registered under the Securities Act on registration statements on FormS-1 (No.333-234180 and333-234418). The Securities and Exchange Commission declared the registration statements effective on October 31, 2019.
Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 7,500,000 warrants at a price of $1.00 per Private Placement Warrant in a private placement to the Sponsor, generating gross proceeds of $7,500,000. The issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act.
The Private Placement Warrants are identical to the warrants underlying the Units sold in the Initial Public Offering, except that the Private Warrants are not transferable, assignable or salable until after the completion of a Business Combination, subject to certain limited exceptions.
On November 13, 2019 the Company consummated the sale of an additional 4,125,000 Units, at $10.00 per Unit, and the sale of an additional 825,000 Private Warrants, at $1.00 per Private Warrant, generating total gross proceeds of $42,075,000.
Of the gross proceeds received from the Initial Public Offering, the exercise of the over-allotment in full and the Private Placement Warrants, $316,250,000 was placed in the Trust Account.
We paid a total of $6,325,000 in underwriting discounts and commissions and $654,126 for other costs and expenses related to the Initial Public Offering. In addition, the underwriters agreed to defer $11,068,750 in underwriting discounts and commissions.
For a description of the use of the proceeds generated in our Initial Public Offering, see Part I, Item 2 of this Quarterly Report on Form10-Q.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None.
ItemITEM 3.
Defaults Upon Senior Securities.None.
DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ItemITEM 4.
Mine Safety Disclosures.MINE SAFETY DISCLOSURES
Not Applicable.applicable.
ItemITEM 5.
Other Information.None.
OTHER INFORMATION
Not applicable.
ItemThe
following exhibitsdocuments listed below are
filed as part of, or incorporated by reference
into,or are filed with this
Quarterly Report on Form10-Q.report, in each case as indicated therein. | | | | | | | | | | | | | | | | | | | | |
| Exhibit No. | Exhibit Description | Description of Form
| SEC File No. | Exhibit No. | Filing Date | Filed or Furnished Herewith |
1.110.1† | | | | | | | X |
| 10.2+ | |
3.1 | | Amended and Restated Certificate of Incorporation, filed with the Secretary of State of the State of Delaware on November 1, 2019 (1) |
| |
4.1 | | Warrant Agreement, dated October 31, 2019, between Continental Stock Transfer & Trust Company and the Company (1) |
| |
4.2 | | Specimen Unit Certificate (1) |
| |
4.3 | | Specimen Class A Common Stock Certificate (1) |
| |
4.4 | | Specimen Warrant Certificate (included in Exhibit 4.1) (1) |
| |
10.1 | | Letter Agreement, dated October 31, 2019, by and among the Company, its officers, its directors and Osprey Sponsor II, LLC (1) |
| |
10.2 | | Investment Management Trust Agreement, dated October 31, 2019, between Continental Stock Transfer & Trust Company and the Company (1) |
| X |
| 10.3 | | Registration Rights Agreement, dated October 31, 2019, among the Company and certain security holders (1) | | | | X |
| 31.1 | |
10.4 | | Private Placement Warrants Purchase Agreement, dated October 31, 2019, between the Company and Osprey Sponsor II, LLC (1) |
| |
10.5 | | Administrative Services Agreement, dated October 31, 2019, between the Company and Osprey Sponsor II, LLC (1) |
| |
31.1* | | | | | | | X |
| 31.2 | |
31.2* | | | | | | | X |
| 32.1 | |
32.1** | | | | | | | X |
| 32.2 | |
32.2** | | | | | | | X |
| 101.INS | |
101.INS* | | Inline XBRL Instance Document | | | | | X |
101.CAL*101.SCH | Inline XBRL Taxonomy Extension Schema Document | | | | | X |
| 101.CAL | Inline XBRL Taxonomy Extension Calculation Linkbase Document | | | | | X |
101.SCH*101.DEF | | XBRL Taxonomy Extension Schema Document |
101.DEF* | | Inline XBRL Taxonomy Extension Definition Linkbase Document | | | | | X |
101.LAB*101.LAB | | Inline XBRL Taxonomy Extension LabelsLabel Linkbase Document | | | | | X |
101.PRE*101.PRE | | Inline XBRL Taxonomy Extension Presentation Linkbase Document | | | | | X |
*104 | Filed herewith.
Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101) | | | | | X |
** | Furnished.
________________ + Indicates management contract or compensatory plan. |
(1) | Previously filed as
† Certain portions of this exhibit have been omitted in accordance with Regulation S-K Item 601. The Registrant agrees to furnish an unredacted copy of the exhibit to our Current Report on Form8-K filed on November 5, 2019 and incorporated by reference herein.the SEC upon request. |
SIGNATURES
In accordance with
Pursuant to the requirements of the
Securities Exchange Act
of 1934, the registrant
has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| | | | | | |
| August 10, 2022 | | | | OspreyBlackSky Technology Acquisition Corp.Inc. |
| |
| |
Date: December 11, 2019 | | | | By: | | /s/ David DiDomenico
/s/ Brian E. O’Toole |
| | | | Name: | | David DiDomenicoBrian E. O'Toole |
| | | | Title: | | Chief Executive Officer and PresidentDirector |
| | | | | | (Principal Executive Officer) |
| |
| |
Date: December 11, 2019 | | | | By: | | /s/ Jeffrey F. Brotman
/s/ Henry Dubois |
| | | | Name: | | Jeffrey F. BrotmanHenry Dubois |
| | | | Title: | | Chief Financial Officer |
| | | | | | (Principal Financial and Accounting Officer) |
19